The Atomic Energy Regulatory Board in India has given Delhi University two weeks to explain how radioactive waste, which killed a man this week, was sold as scrap.
The board also ordered the university to stop experiments using radioactivity.
A scrap metal worker died on Monday of multiple organ failure, after dismantling an irradiation machine sold by the university. Several others are still in hospital.
Police say they were exposed to radiation after dismantling the machine.
Search teams have found cobalt-60 in several shops in the scrap market in the city's Mayapuri industrial area.
The BBC reports the machine, which had not been used since the mid-1980s, was sold in February.