The Central Bureau of Investigation on Tuesday night arrested Dynamix Balwas group managing director Shahid Usman Balwa in connection with the 2G spectrum allocation scam.

Highly placed sources in the agency said Balwa was arrested from his Bandra residence in Mumbai and would be taken to Delhi for being confronted with former telecom minister A Raja whose CBI custody was extended by two more days on Tuesday.

The arrest of Balwa comes two days before the 2G case comes up for hearing in the Supreme Court.

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He would be produced before a magistrate on Wednesday for transit remand to Delhi, the sources said.

Balwa-promoted DB Reality floated Swan Telecom. Raja allegedly helped Swan bag 2G licences for 13 circles, including Mumbai and Delhi, for Rs 1,537 crore (Rs 15.37 billion), but Swan sold 45 per cent shares to the United Arab Emirates telecom giant Etisalat for approximately Rs 4,500 crore (Rs 45 billion) within months of bagging the spectrum.

The sources claimed CBI has evidence from the Income Tax department that Balwa, considered close to Raja, was instrumental in channelling the kickbacks allegedly received by the former telecom minister from the sale of 2G spectrum.

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According to the sources, Balwa had allegedly helped the former telecom minister and some of his aides park the money in real estate sector.

Balwa is the fourth person to be arrested in 2G spectrum case after Raja, his former personal secretary R K Chandolia and former telecom secretary Siddharth Behura.

Chandolia and Behura were on Tuesday sent by a court in Delhi to judicial custody on completion of their interrogation by the CBI.