Mining baron and former Karnataka minister G Janardhan Reddy and managing director of Obalapuram Mining Company (OMC) B V Srinivas Reddy were arrested on Monday 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.

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Jagan accuses Cong, CBI of witch-hunt, praises BJP

Hitting out at Congress and CBI, Y S Jaganmohan Reddy who is facing probe for allegedly owning illegal assets today charged the party with indulging in a "witch-hunt" through the agency even as he showered praise on the BJP for raising the issue of "injustice" meted out to him.

The son of former Andhra chief minister Y S Rajasekhara Reddy, however, made it clear that his YSR Congress Party would never support the BJP "at any level" as they were ideologically different.

Reddy said he had prepared a detailed note on how the CBI is adopting "a one-sided approach" in Andhra Pradesh and will be circulating it among various political parties.

"In fact, I am here to meet every opposition party leader and the prime minister, to tell him about what the CBI is doing and whether it is moving in the right direction or not.... In Andhra Pradesh, the CBI is not moving in the right direction, the direction in which it should be moving."

Reddy thanked the BJP and its leader Sushma Swaraj for coming out in his support.

"I am thankful to the BJP and Sushma Swaraj that despite all the differences that my father and my party have towards BJP all along, still the BJP has come forward. I am thankful to her for having raised the matter of injustice. I will meet her to thank her for supporting me, inspite of having ideological differences."

He, however, also made it clear, "We will definitely be not supporting the BJP at any level.... We have made our stand very clear categorically that ideologically the BJP and our party stand on a different footing."

Accusing the CBI of trying to implicate him, Reddy said he will apprise political parties, "as to what kind of injustice is being meted out and what kind of role the CBI is playing. I will be meeting every one of them. I will be meeting Mulayam Singh, Sharad Pawar, communists and others.

But Sushma Swaraj, I will be meeting personally to thank her."

The Kadapa MP, who fell out with the Congress after his father's death, charged the CBI with "witch-hunting" and "having pre-conceived notions of implicating him".

"So much so that the objective of CBI investigation is there to check out whether something has happened or not.

Instead, their objective is to implicate."

He accused the Congress of witch-hunting by using the CBI to target him.

"If you have pre-conceived notions to implicate someone and you are looking for that, then it does not become investigation, it is witch-hunting," he said.

He also accused the Congress party of indulging in "mudslinging" and trying to malign his father's name.On the disproportionate assets case against him, Reddy said, "I am the 52nd respondent, but where have the state government agencies gone, who are respondents 1 to 10. In fact, the state did not even file the counter.

"...For nine years Chandrababu Naidu ruled and gave land for many like Emaar, IMG, but nothing was initiated," he said referring to the TDP chief.