Hyderabad: A special CBI court here on Tuesday rejected the bail petitions of former Karnataka minister and mining baron Janardhan Reddy and his brother-in-law B Srinivas Reddy in the illegal mining case.

The court sent the two in CBI custody till September 19.

Judge B Naga Maruthi Sarma directed the Chanchalguda Jail authorities to hand over Janardhana Reddy and Srinivas Reddy to the CBI immediately for further questioning in the illegal mining case.

The CBI originally sought custody of the two for 15 days, saying their custodial interrogation was crucial as they had personal knowledge of illegal mining of iron ore in mining area across Karnataka and Andhra Pradesh.

Besides, they could provide information on the conspiracy with government officials allegedly involved in the racket.

The CBI had registered the case against Reddy's Obulapuram Mining Company (OMC) 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 of the state.

Janardhan Reddy and OMC Managing Director Srinivas Reddy were arrested by a CBI team on September 5 at Bellary in Karnataka after the agency conducting searches at their premises in connection with alleged illegal mining.

OMC is accused of indulging in mining iron ore illegally from several locations including neighbouring Karnataka and exporting the excavated ore to China, Singapore and Malaysia.

"Mining and extraction of 29.30 lakh tonnes of iron ore was done in several areas other than the leased area of 68.5 hectares held by the OMC as the mineral ore in Antargangamma Konda mines, owned by OMC, was not of commercial quality and no major mining activity took place in the said land," the CBI Counsel had earlier argued.

"It is through the custodial interrogation we want to know why Janardhan Reddy has not mined in his own OMC field, though he is not having lease in Karnataka.OMC illegally brought iron ore extracted in other areas which was shown as if it was excavated from the leased area of 68.5 hectares,” they argued.

However, the defence counsel in its arguments countered the CBI claims, saying the area of operation (investigation) by the CBI on the alleged illegal mining, if so, was restricted only in Andhra Pradesh and not in Karnataka.

The defence said the question of illegal mining was inter-linked to a boundary dispute of the mine (Karnataka and Andhra Pradesh) which was pending in the Supreme Court.