The complaint was dismissed as Garre has an Italian passport and FIFA allows the transfer of minors between clubs in European Union countries but Velez officials claim that the rule was invalid as Garre played for an Argentine club.
"We're angry because City came after our player, we said no and they took him anyway. That's not good behaviour between two clubs," Bernardo Bertelloni, club secretary of Velez told The Times.
"He (Garre) left here a couple of days before his 16th birthday, he spent a few days in Germany and he entered England one day after his 16th birthday.
"Man City argued that there is an exception in the FIFA rules... But the FIFA rule does not say that, it says he can move only within the EU, between EU clubs."
The English Football Association (FA) and FIFA are also listed in the dispute Velez are taking to the Swiss authority.
Should City be found guilty, they are likely to face a standard transfer ban that prohibits them from registering new players for a certain number of transfer windows.
Spanish side Atletico Madrid had their two-window transfer ban for signing minors upheld by CAS on Thursday, while their Spanish rivals Barcelona and Real Madrid also served bans for transfer violations.
(Reporting by Aditi Prakash in Bengaluru; Editing by John O'Brien)
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