His arrest is part of an investigation into the sale of second-generation (2G) mobile phone licences for knock-down rates in 2008, which is estimated to have cost the Indian exchequer up to 4.8 billion dollars.Balwa is also the vice-chairman of Etisalat DB Telecom India Ltd, a joint venture between DB Realty's parent company Dynamix Balwas (DB) Group and the Abu Dhabi-based telecoms giant Etisalat. Former telecoms minister A. Raja, who is under questioning after being arrested earlier this week, is suspected of rigging the rules to favour certain companies, allegedly including Etisalat DB -- when it was called Swan Telecom.

Etisalat DB holds telephony, Internet and broadband licences in 15 areas across India covering 900 million people, the Mumbai-based firm said on its web site.A statement from DB Realty on Wednesday said that Balwa had been "wrongly implicated" in the alleged scam, which has rocked the Indian government."We reiterate that neither Mr. Balwa nor any person/entity forming part of the DB Group has done anything inappropriate or illegal," the company said.

"Mr. Balwa will be strongly contesting the proceedings. He has immense faith in our judiciary and judicial system and is confident that ultimately the truth will prevail and Mr. Balwa will stand vindicated."DB Realty, which had a net worth of 32.1 billion rupees at the end of December last year, said the developments will not affect the functioning of the company "in any manner whatsoever".But the company's shares tanked by as much as 20 percent on the Bombay Stock Exchange on the news to an intraday low of 109.7 rupees before recovering slightly to 114.8 rupees in early afternoon trade.