This is the 10th and key arrest in the case involving the National Spot Exchange Ltd , which is owned more than 99 percent by Shah's FTIL, Additional Police Commissioner (Economic Offences Wing) Rajvardhan Sinha told media persons here.
Besides Shah, former CEO of Multi-Commodity Exchange of India (MCX) S. Javalgekar has also been arrested.
The duo will be produced before a court Thursday, Sinha said.
"They have not been co-operating with the police during the interrogation and their replies were evasive. Hence we decided that they needed to be placed under custody to revel crucial information and revelation of the truth," he said.
According to Sinha, investigations revealed that Shah, who a NSEL director and member of the audit committee of the exchange had also approved all the entries of borrowers at the NSEL and his denial of knowledge of the fraud was not correct.
Though the NSEL is a commodities exchange, there are no warehouses in existence where the physical goods could be stored and the bogus warehouse receipts were allegedly issued and trading carried out only on paper, revealed the investigations, taken up after an investor complained of being duped.