Bellary/New Delhi: Mining baron and former Karnataka Minister G Janardhan Reddy and Managing Director of Obalapuram Mining Company B V Srinivas Reddy were on Monday arrested by CBI after searches at their premises allegedly led to seizure of over 30 kg of gold and more than Rs 4.5 crore in cash.

A 15-member CBI team from Hyderabad conducted searches at Janardhana Reddy's house and claimed to have seized Rs three crore in cash and over 30 kgs of gold, official sources alleged.

A sum of Rs 1.5 crore was also seized from the residence of Reddy's brother-in-law Srinivasa Reddy, who is also the Managing Director of the company owned by the Reddy family, they claimed.

"Janardhana Reddy and Srinivasa Reddy have been arrested under Prevention of Corruption Act and we are taking them to Hyderabad", CBI DIG P V Lakshminarayana, who is heading the team, told reporters in Bellary.

The arrests came in connection with the cases filed by CBI against the Reddy brothers in Andhra Pradesh, the sources said, adding both were expected to be produced before a special CBI court in Hyderabad later in the day.

Even as the CBI team escorted the Reddys to Hyderabad, the agency continued searches at Janardhana Reddy's residence in Bellary and Bangalore.

A team questioned Aruna Lakshmi, wife of Janardhana Reddy in Bellary, and another conducted searches at his residence in Bangalore, they said.

The CBI action comes a day after the Reddy brothers' close associate and former minister B Sreeramulu quit his assembly membership protesting against their being kept out of the ministry following their indictment by a Lokayukta report on illegal mining. The CBI had registered the case against the company on December 7, 2009 at the request of Andhra Pradesh Government in the wake of allegations of illegal mining and irregularities in allotment of mining leases to OMC in Obulapuram and Malpanagudi villages of Anantapur district.

The Andhra Pradesh High Court had granted interim stay on the probe on December 14, 2009. The stay was vacated in December, 2010 after which the agency started its probe.

"After vacation of stay, the CBI Hyderabad started the investigation of the case and till now around 1530 documents, 112 iron ore samples had been collected and around 85 witnesses and suspects have been examined," a CBI spokesperson said in New Delhi.

Meanwhile, supporters of Janardhana Reddy staged protest in parts of Bellary against his arrest and raised anti-Congress slogans. Police said security has been beefed up in the city.

About 65 mining companies including OMC are under the CBI scanner. There are allegations of irregularities in the mining activities of OMC which is owned by the brothers – G Karunakara Reddy, G Janardhana Reddy, G Somashekara Reddy.

OMC has also been accused of transporting ore in far excess of actual production, irregularities in granting of leases, encroaching upon mining areas belonging to Karnataka by crossing the inter-State boundaries.

Reddy, who was the Tourism and Infrastructure Development Minister in the previous B S Yeddyurappa government, was among those indicted by the Lokayukta report on illegal mining submitted to the Government on July 27.

Sources in Bangalore said CBI teams conducted searches at the premises of close associates of Reddy.

G Somasekhara Reddy, one of the brothers of Janardhana said in Bellary, said his brother would be moving an application before the Andhra Pradesh High Court seeking bail.

Former minister B Sreeramulu, a close aide of the Reddy brothers and also one of the partners of the OMC, slammed the arrest of Janardhana Reddy as "political vendetta let loose by Congress through its tool CBI".

"It is high time the CBI was brought into the ambit of the Lokpal Bill so that it stops from being a Congress Bureau of Investigation," Sreeramulu told reporters.

The CBI team even searched the bag of Reddy's daughter during the raid, Sreeramulu, who resigned as MLA on Sunday after being denied a ministerial berth, said.

The former minister said he continued to be a partner in the OMC, and had no fear of being arrested.  

He said the arrest of Janardhana Reddy would not deter him from continuing his "swabhimani yatra" across the state, to inform people on the reasons that prompted him to quit as MLA.

BJP came to power through slush money: Congress

Congress in Karnataka alleged the BJP hoisted its first government in the south only with
the help of money gained through illegal mining and demanded handing over investigation into the multi-crore scam to CBI.

Referring to former Minister B Sreeramulu's contention that he and Reddy brothers from Bellary were instrumental in BJP coming to power, Karnataka Pradesh Congress Committee President G Parameshwara said in Bangalore on Monday, "BJP came to power through money gained by illegal mining".

Pushing for a CBI probe into illegal mining in the state, Parameshwara also referred to the recent Lokayukta report on the issue, and noted that Reddy was among those named in it.
If Reddy and the BJP are confident that he would come clean on the issue, a CBI investigation would settle the issue once and for all, he felt.

He rejected the charge of some senior BJP leaders who saw the Congress hand behind Reddy's arrest and pointed out that CBI always came under the central government and the investigating agency played according to the rule book.

Parameshwara severely criticised the BJP government for not acting on the Lokayukta report submitted on July 27 and said at least notices should have been issued against 787 officials named in it seeking their explanation.

On Congress MP, Anil Lad and MLA, V Muniyappa being named in the Lokayukta report, he said they would be removed from the party the moment they are found guilty.

Reddys' arrest a lesson to others: Moily

Meanwhile, Union Minister Veerappa Moily on Monday said the arrest of former Karnataka minister G Janardhan Reddy by CBI in the illegal mining case was a "lesson" for those occupying high offices not to misuse their position.

"When you totally abuse the rule of laws, this will happen.... This is a lesson for everyone who occupies office as a minister or officer that they should not misuse the office," he told reporters outside Parliament House.

Moily also lashed out at Yeddyurappa, acuusing him of "unabated" and "gross abuse" of authority.

"Instead of CBI hounding him, he was himself hunting. There was gross abuse of the office of a minister and total abuse of authority by the then Chief Minister and also many of his ministers, which went on unabated," he alleged.

Asked whether the spillover of the development could affect Congress leaders as well, Moily said, "Whoever is involved, whichever party he belongs to it, which ever status he belongs to, whichever authority he occupies, I think they have to be strictly dealt with."

Hegde for CBI probe into illegal mining

Former Karnataka Lokayukta N Santosh Hegde favoured handing over the probe into illegal mining in the state to the CBI, maintaining that the Obalapuram Mining Company owned by former minister G Janardhana Reddy indulged in such activity.

The former Supreme Court Judge said the CBI move to arrest Janardhan Reddy is not a result of the illegal mining report that he submitted to the Government as Lokayukta on July 27.

In this context, he noted that Karnataka government has not given permission to CBI to conduct a probe into the matter, adding, Reddy's arrest is a result of sanction given by Andhra Pradesh in connection with some irregularities.

"They (OMC) may deny many times that they have indulged in illegal mining. But we (in the Lokayukta report) have said they did engage in that through documents we produced," Hegde said.