Sir Patrick chaired the Conservative board last year which blocked former Olympic rower Alex Story from becoming an MEP when a vacancy came up in Yorkshire.
Mr Story is suing the party over the decision and a judge will decide on Monday whether the case should go for a full hearing.
The latest potential embarrassment comes amid growing calls for Sir Patrick to be sacked with MPs already furious with him over the botched election campaign in June.
Sources in Westminster are also questioning why he promoted a candidate to the European Parliament ahead of Mr Story who has now been ditched by his local party for next year’s council elections.
Mr Story was number two on the Tory Yorkshire list in the 2014 European Parliament election and narrowly failed to get elected as a result of the Ukip surge.
However, when the number one on the list Timothy Kirkhope stepped down to take a seat in the House of Lords, Mr Story was blocked and instead number three on the list Leeds councillor John Procter was promoted.
But it emerged last month that Mr Procter and his wife Rachel have both failed to be reselected by the party in Yorkshire for standing for election for Leeds city council next year.
Mr Procter, 50, who was ditched despite being deputy leader of the Tory group, lost out in the Wetherby ward to local mayor Norma Harrington to contest the Wetherby ward seat.
Mr Story was told he was blocked from becoming an MEP because at the time he was off the parliamentary candidates list but it was alleged that Mr Procter was also off the parliamentary list when the vacancy emerged.
The controversy has led to further questions in Westminster about Sir Patrick’s judgement from senior party figures.
A party source told the Daily Express: “This is a mess. It’s another example of McLoughlin just not being in control of what’s going on and why he needs to go. After the election fiasco, it’s amazing he is still there.
“There was no good reason to block Alex Story from being an MEP when there won’t even have MEPs after March 2019.
“It just caused unnecessary controversy and a legal challenge which has done nobody any good.”
It has also fuelled anger over why some other prominent Leave campaigners including current MEPs David Campbell Bannerman and Daniel Hannan were also apparently blocked from getting seats in this year’s Westminster election.
A party activist said: “This was down to who people in Central Office like and don’t like.
“We saw this happen to a string of good candidates in the general election who were blocked by Central Office from standing.
“You have to wonder why somebody who has now apparently been dumped by his local party for a council election was considered good enough to be promoted up the list to become an MEP.”
The row has led to a campaign led by Mr Campbell Bannerman to democratise the party and have a chairman elected by the membership as well as allowing constituency parties to have more control over who is their candidate.