The official said Registrar V P Gupta, who was asked to explain the reason behind the order to release the pay, did so on directions from Venugopal.
Gupta was asked to relinquish charge as Registrar by the Director on Saturday and was issued a notice to explain his conduct on the salary issue within two weeks. The order was, however, overruled by the Health Ministry.
It is learnt that Gupta had given an explanation to the Director detailing sequence of events after doctors went on strike forcing the government to invoke "no work, no pay" clause.
Authorities in the Institute had written to the Director suggesting that the matter be considered closed after an explanation from Gupta.