Mumbai, Jun 1 (PTI) A Mumbai court on Monday allowed the Central Bureau of Investigation (CBI) to arrest Amitabh Jhunjhunwala, a former senior executive at industrialist Anil Ambani-led Reliance Group, in a case related to alleged bank loans misuse.

Jhunjhunwala was produced before special CBI judge J P Darekar on a production warrant from New Delhi's Tihar Central Jail, where he was under judicial custody in a related money laundering case being probed by the Enforcement Directorate (ED).

Following his production, the CBI, represented by Special Public Prosecutor (SPP) A Limosin, filed an application seeking remand and permission to formally arrest the accused.

Advocates Reeti Upadhyay and Mudit Jain, appearing for Jhunjhunwala, contended that as per the production warrant issued by a Delhi court, the former executive of the Anil Dhirubhai Ambani Group (Reliance ADAG) was required to be produced before the court on June 5.

His appearance before the court prior to that date is illegal, the defence argued.

After hearing arguments from both sides, the Mumbai court allowed the CBI's application to formally arrest the accused as per provisions of law.

However, as the proceeding continued beyond the working hours, the CBI told the court that they will produce the accused before it on Tuesday after completing arrest formalities.

In the meanwhile, considering the "peculiar situation" regarding the late hour and the accused's travel distance from Delhi, the court remanded Jhunjhunwala to judicial custody.

Jhunjhunwala, group Managing Director of Reliance Communications group, was looking after important functions like corporate finance, banking, utilization of funds, among others.

The CBI has claimed that based on his directions, loan funds received from banks were managed/utilized by other officials of the RCom group. Due to misutilization of loan funds, the banks suffered wrongful losses, said the probe agency.

The CBI on Friday filed a chargesheet in the case against 16 individuals/entities. Jhunjhunwala has not been named in the chargesheet filed in the special court, but the investigation against him was ongoing.

The accused named in the chargesheet included Reliance Communications, five senior executives of the company and ten bank officials.

They were charged with criminal conspiracy, cheating and criminal misappropriation under the IPC, and criminal misconduct under the Prevention of Corruption Act, the CBI said in a press release.

The chargesheet pertained to alleged misuse of a Rs 1,200 crore term loan sanctioned by the SBI, Rs 500 crore letter of credit facilities sanctioned by Bank of Maharashtra and Rs 350 crore letter of credit facilities sanctioned by Syndicate Bank, it said.

Further investigation has been kept open to probe other loans sanctioned by the consortium of banks and to ascertain the role of other conspirators involved in the alleged diversion and misappropriation of public funds, the CBI said.

The central agency registered the case on SBI's complaint against Reliance Communications and Anil Ambani for allegedly causing a loss of Rs 2,929.05 crore to the bank.

"Rupee Term Loans" were sanctioned to Reliance Communications by a consortium of 11 banks led by the SBI. As per the FIR, the total exposure amounted to Rs 19,694.33 crore and involved 17 state-run banks. PTI AVI RSY