Leighton didn't provide details of any charges against Thiess Minecs Chief Executive Raman Srikanth in the statement, but said it was filing an application to courts in India to dismiss the case. A Leighton official in Sydney contacted by telephone declined to comment further on the arrest.
"The complaint has been made by Hyderabad-based company Roshni Developers Private Limited and relates to matters that are currently the subject of civil arbitration proceedings in Singapore that have been ongoing for two years," Leighton said in its statement.
In a separate statement, Leighton said that the biggest client at the Pakri Barwadih coal mine operated by Thiess Minecs is attempting to scrap a five-year contract worth $267 million. The client, India's largest power generator NTPC Ltd, didn't immediately answer calls from Reuters seeking comment.
The Australian company said NTPC is in breach of its contract by seeking to terminate it, adding that the case will not have any "material impact" on Leighton's financial results.
An Indian newspaper reported in January that NTPC said coal was being illegally extracted from its Pakri Barwadih block and sold by outsiders, adding that NTPC had requested the district commissioner of the area where the block is located to take action to stop it.
Leighton said NTPC has already called A$18.5 million ($17.3 million) worth of bank guarantees issued by Thiess Minecs and added that it will initiate legal proceedings to recover the bank guarantees, as well as against the termination notice.
At 0350 GMT, Leighton shares were trading down 1.2 percent in a weak Australian market.