The resignation comes a day ahead of the hearing of the three-member inquiry committee appointed by Rajya Sabha chairman to probe into charges of land grabbing and acquiring of assets disproportionate to his income.
Sixty-one-year-old Dinakaran is understood to have sent his resignation to President Pratibha Patil, sources said. They said "overall he was not happy with what was happening and he also felt that his continuance would harm the judiciary."
Justice Dinakaran, who failed to get any relief from the Supreme Court after various attempts to stymie the committee proceedings did not succeed, does not have faith in the impartiality of the panel, the sources said adding that was one of the reasons for his resignation.
The apex court collegium had cleared his name for appointment as judge of the Supreme Court when Dinakaran was the chief justice of the Karnataka high court.
Dinakaran's elevation was put on hold after some lawyers' groups brought the allegations of corruption and judicial misconduct. Earlier, he was moved to the Karnataka high court from Madras high court. As he faced allegations, which he had strongly denied, he was shifted to the Sikkim high court.
The apex court on July 5 had rejected his plea to invalidate the enquiry by a Rajya Sabha-appointed panel into his alleged corrupt practises and misconduct and accused him of adopting delaying tactics.
The court had only accepted his plea to replace one of the three members of the panel senior advocate P P Rao whose unbiased attitude was questioned by him. However, the court had held that it was a "calculated" move on the part of Dinakaran to raise objection against Rao to delay the proceeding which is to be completed within three months.
The court had said reconstitution of committee will not hamper the proceedings and it shall proceed on the charges already framed against the Judge.
The committee, appointed by the Rajya Sabha chairman in January 2010, is headed by Supreme Court judge Justice Aftab Alam and it also includes Karnataka high court Chief Justice J S Khehar besides Rao. The three-member panel was to examine the 12 charges framed in the notice of motion adopted by the House.
Dinakaran had challenged the proceedings on the ground that the panel had framed additional charges and was also independently conducting investigations and collecting material against him, which according to the judge, was not permissible under law.
The charges against the judge include land grabbing, accumulation of unaccounted assets, passing judicial order for extraneous considerations, following which his elevation to the Supreme Court was also stalled.