The supreme court on Tuesday mulled invoking terror and other stringent penal charges against Pune stud owner Hasan Ali Khan, accused of massive money laundering and tax evasion, for his alleged links with arm dealers and people linked to terror activities.

A bench of justices B Sudershan Reddy and S S Nijjar also asked the union government to examine if the case registered against him for possessing fake passports could be probed by the CBI.

The bench contemplated invoking terror charges under anti-terror law Unlawful Activities Prevention Act and other stringent provisions of the Indian Penal Code owing to Khan's alleged links with various arms dealers and those involved with terror-related activities, threatening the country's security.

The bench expressed displeasure that the probe against Khan in the fake passport case had not proceeded in the right direction with right speed "as nothing is moving despite the magnitude of the issue."

The court made the observations and issued directions while hearing a public interest litigation filed by eminent jurist Ram Jethmalani, seeking repatriation of huge corpus of black money stashed in banks abroad by unscrupulous Indian citizens.

Khan was arrested last night by the enforcement directorate which carried out searches at his Pune home and that of his associates' premises in several cities, cracking the whip to meet Tuesday's supreme court deadline.

53-year-old Ali, who was detained in Pune, was brought to Mumbai later and was grilled by the ED for nearly six hours before being put under arrest.

The apex court also asked the government to furnish details of the four officials probing the case against Khan, who were abruptly transferred midway into the investigation.

The government responded to the query saying the officials were on deputation with the ED and were repatriated.

Solicitor general Gopal Subramaniam, however, assured the court that he would take up the matter with the government and see that the officials are retained.

The government also admitted that the court was justified in seeking Khan's custodial interrogation as the charges against him warranted such questioning.

"It is a case in which a case is made out for custodial interrogation," Subramaniam said.

The solicitor general also admitted that one of the investigating officers, who was a deputy commissioner of police, was earlier harassed apparently by his superiors as he had the courage to take on Khan in the fake passport case.

Meanwhile, senior counsel Anil Divan, appearing for petitioner Jethmalani, expressed serious apprehension about Khan's life as he had enough material to expose the powers-that-be behind his various murky deals.

The counsel recalled that Ashutosh Asthana, a key accused in the Ghaziabad provident fund scam, was found dead under mysterious circumstances in Dasna Jail of the district during the CBI probe into the case.

Meanwhile, the ED submitted to the court in a sealed cover its status report on the probe into the case related to black money in which they also mentioned Khan's arrest last night.

Subramaniam also told the court that besides the ED report, he would also furnish a status report relating to the investigation so far conducted by the income yax department.

The bench posted the matter for further hearing to March 18.