"Wasim has been a national hero and a legend and unnecessary inconvenience and harassment has been caused to him and the case is dismissed," civil judge Anwar Gondal said in his judgement against Syed Najmul Abbas. Gondal fined Abbas 15,000 rupees (250 dollars).
Abbas filed his case in September last year after media reports that Wasim was coaching Indian bowlers and was to sign a deal to formalise this arrangement.
Abbas wanted Wasim stopped, while the cricketer denied he was passing his skills on to rival India.
The storm of controversy over the issue subsided when the Board of Control for Cricket in India (BCCI) hired former Australian pacer Bruce Reidas their bowling coach in November last year.
Wasim, who retired from international cricket in May last year with a world record 502 One-day and 414 Test wickets, is a television commentator in Australia where India have wrapped up a Test series and are playing a tri-nation tournament with Australia and Zimbabwe.
Pakistan's coach Javed Miandad reignited the controversy last week when he said he hoped Wasim had not given Indian batsmen tips about playing reverse swing, for which Pakistani bowlers are famous.