Sessions Judge Srikanth Watavatagi, who heard arguments put forward by both Madani's counsel and the public prosecutor yesterday, rejected the application, saying there was no prima facie case to grant anticipatory bail to the leader.
Public prosecutor K Rudraswamy told reporters later that the future course of action in the case would depend on the investigating agency.
"The investigating officer has to discharge his duties and collect all the material and arrest all the persons connected with the blasts case," he said.
Responding to a question, Madani's counsel P Usman said "The bail plea has been rejected. I am yet to get the certified copies of the order. I will have to study the order and discuss the future course of action with my client."
C K Abdul Aziz, chairman of PDP's Policy Formation Committee, who was also present, alleged that criminal law had been "misused" to deny anticipatory bail to Madani and they would approach the high court.
Madani and 31 others were issued charge sheet for their alleged involvement in the blasts that left a woman dead and 20 others injured here on July 25, 2008.
Madani told reporters at Anwarassery near Kollam that he would challenge the order in the high court.
Madani said while rejecting his plea the court had completely relied on the "lies and unfounded arguments" submitted by the prosecution against him.
He alleged the prosecution had "misled" the court by submitting that they had obtained Centre's sanction for issuing him a charge sheet under the Unlawful Activities Act.
Continuing his tirade against Intelligence agencies, Madani said he was being implicated in the case with "certain ulterior motives and to secure the interests of certain vested interests".
He claimed it was in the interest of some agencies "to create terrorists" as only then they could justify their relevance.
Madani, however, said he had total faith in the judiciary and would continue the legal battle to prove his innocence.
He also urged his followers not to get provoked if he was arrested and put behind bars. He said he was keen that the case against him would not lead to communal conflict.
Meanwhile, a large number of PDP workers converged at Anwarassery to pledge solidarity with their leader where several of his supporters were continuing a fast "seeking justice for Madani"