Musharraf originally sent the allegations to be heard by a special panel of five judges, but in May Chaudhry launched a Supreme Court challenge against both his suspension and the powers of the panel.
The government backtracked last Thursday when it asked the Supreme Court to deal with the entire case, and at the same time filed details of the allegations.
However, on Monday the government withdrew the application and apologised after complaints from Chaudhry's lawyer and the Supreme Court judges hearing the case.
Khalil-ur-Rehman Ramday, the presiding judge, ordered the government to pay costs of about $1,660 for filing the "scandalous and vexatious" application which he said aimed to damage judges including Chaudhry.
Ramday said: "What message you will convey to the world about the president, about the head of state, because you have maligned him... you have done all this in his name, he may not be knowing what you are filing."
He said the money would go to flood victims in Baluchistan province in the southwest of the country.
Ramday also suspended the licence of a legal official whom the government used to officially lodge the documents with the court, and told a senior law ministry officer to appear in court to explain himself.
Aitzaz Ahsan, the suspended chief justice's lawyer, showed the court copies of the documents, saying that several were unsigned or incorrectly dated.
He said there were also photographs of Chaudhry's house and cars parked outside.