A court in Thrissur has asked the police to file a First Information Report against the Chief Minister.
A petition has asked for a case against Mr Chandy after one of the two main accused in the case, Saritha Nair, told an inquiry commission that a bribe of nearly two crores was paid to the personal staff of the chief minister.
Saritha Nair and her partner Biju Radhakrishnan are accused of collecting crores from industrialists after promising them solar panels at cheaper rates, and using political connections to land big contracts.
Mr Chandy, who belongs to the Congress, is accused of links with Saritha Nair; many calls were allegedly made from his office to her.
The Chief Minister spent nearly 11 hours being questioned on Monday. He denied any involvement in the scam and also refused to take a lie-detector test as suggested by Saritha Nair's lawyer.
To add to the ruling party's troubles, a leaked audio tape played on local media had Congress spokesperson Tampanoor Ravi advising Saritha Nair to "play safe" in her testimony when she was cross-questioned. The politician denied that his remarks are evidence of him trying to coach Ms Nair.
Earlier today, Left Front activists protesting outside the state government's headquarters in Thiruvananthapuram were lathi-charged by the police when they allegedly tried to break the security cordon.
Veteran Left leader VS Achuthanandan said: "The Chief Minister has to resign. These are the circumstances under which (ministers) KM Mani and K Babu resigned." Mr Babu won reprieve today as the High Court cancelled a vigilance court order for a police case against him.
Assembly polls are due in Kerala this year and the Opposition is expected to use the solar scam to target Mr Chandy and the United Democratic Front that his Congress party leads.
Three personal staff members of the chief minister were suspended after investigations, but Mr Chandy has denied any direct link.
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