Hyderabad, May 28 (IANS) The Central Bureau of Investigation (CBI) has sought 14-day custody of YSR Congress Party leader Y.S. Jaganmohan Reddy for further questioning on charges of corruption.

Jagan, as the parliament member is popularly known, was arrested by the CBI Sunday night after three days of questioning about investments flowing into his companies after his father became the chief minister.

The agency presented him in a CBI special court Monday and justified his arrest.

Jagan came out of Dilkusha Guest House around 10 a.m. Accompanying Jagan was his uncle Y.S. Vivekananda Reddy, who quit the Congress party last week. He along with Jagan's wife Bharathi drove to the court, where police had made unprecedented security arrangements.

The court, which heard the arguments from both sides, adjourned the hearing till 3 p.m.

Looking uncomfortable, Jagan was seen dozing off in the court hall. He appeared to have spent sleepless night in the CBI custody at Dilkusha Guest House.

Appearing on behalf of the CBI, Additional Solicitor General Ashok Bhan told the court that Jagan is a white-collar criminal, who is running a hawala racket, damaging the country's economy.

The agency alleged that Jagan misused the position of his father and then chief minister Y.S. Rajasekhara Reddy to become richer. CBI counsel described him as the main conspirator and ultimate beneficiary of the quid pro quo investments.

The CBI pleaded to the court not to grant Jagan bail as he may influence the witnesses and fudge the accounts.

Alleging that Jagan became richer by looting public money, CBI counsel said in the Vanpic case alone Rs.300 crore were misused.

The CBI argued that the government allotted lands and gave other concessions to companies which put their money into Jagan's businesses.

Jagan's lawyer Sushil Kumar argued that the arrest was illegal and amounted to contempt of court as he was arrested a few hours before he was scheduled to appear in the court in response to the court summons.

Kumar alleged that the arrest was a political conspiracy to keep Jagan away from the by-elections campaign. Counsel wondered why the CBI choose to question and arrest Jagan at this stage when the investigations into the case were going on for the last nine months.

Jagan's counsel also argued that he is cooperating in the investigations and is not going to escape.

He told the court that Jagan never tried to influence witnesses so far and there is no ground to believe that he would do so if granted bail.

The court was also told that the CBI had completed preliminary investigations and had so far filed three charge sheets.

The CBI has booked Jagan for corruption, cheating, criminal conspiracy, criminal breach of trust and falsification of accounts.

Jagan was scheduled to appear in the CBI court with regard to the first charge sheet filed by CBI on March 30. Judge A. Pullaiah first took up this case for hearing and, barring Jagan and his close aide Vijay Sai Reddy, granted bail to remaining 11 accused.