United Kingdom Home Secretary Theresa May had signed the official orders for his extradition to India to answer the Central Bureau of Investigation's case on May 22, giving him 14 days to appeal against the order.
"An appeal has been filed and it will go back to the legal process," a Home Office spokesperson said.
The case will now proceed to a case management conference hearing, to be scheduled over the next few days.
Shankaran, a close relative of former navy chief Admiral Arun Prakash, has been embroiled in a legal challenge against the CBI's extradition request to the UK government, dating back to 2007.
On March 27, at a hearing at Westminster Magistrates Court in London, District Judge Nicholas Evans ruled that "a case to answer has been made out" against the accused, clearing the way for the home secretary to issue his extradition to India.
Meanwhile, the retired naval commander has been remanded on conditional bail, which includes the requirement to live at a single UK address he provided to the court, a deposit of 20,000 pounds and no right to foreign travel.
He is a key accused in the case of leaking classified information from the War Room to arms dealers and has been absconding since the case was registered by the CBI in March 2006.
His passport was revoked on May 1, 2006 and an Interpol Red Corner Notice was secured against him in July that year. An Interpol Red Notice is the closest instrument to an international arrest warrant.
Shankaran was first located in UK in 2007 and an extradition request was sent.
Shankaran was arrested by UK authorities in April 2010 on the basis of the non-bailable arrest warrants issued by the Court of Chief Metropolitan Magistrate in New Delhi.
The UK's Crown Prosecution Service had argued the CBI's case that there was substantial evidence to extradite the accused for a trial in India.
Shankaran's defence team, led by James Lewis and solicitor Edward Grange, had claimed that some of the evidence should be ruled inadmissible. They had argued that their client's human rights were at a "real risk" of being impinged due to the "endemic delays in the Indian judicial system".
Delivering his verdict in March, Judge Evans said, "The court is concerned with English rules of law and evidence that may be inadmissible in India is not a relevant consideration. No new evidence has been presented that deals a knock-out blow to the prima facie case to answer".
He also dismissed Shankaran's claims -- that the CBI had gone "out of the way to cover up false and fabricated evidence" -- as having no "merit whatsoever".
The judge said extradition hearings are bound by good faith between sovereign states and he is confident that if the prosecution in India no longer felt there was "credible and admissible" evidence against the accused, then it was their duty to end the proceedings and withdraw the extradition request.
The process will now return to the courts in London once again.
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