A special court in Hyderabad on Friday sent to judicial custody a senior official of postal department allegedly involved in fraudulently exchanging new currency notes amounting to nearly Rs 3 crore.

Senior Superintendent of Post Office, Hyderabad City Division, K Sudheer Babu, who had surrendered before the Central Bureau of Investigation (CBI) on Thursday, was produced before the court, which sent him to judicial custody till December 23.

Two other accused, Nitin and Narasimha Reddy, who acted as middlemen, were also arrested and produced before the court. They too were sent to judicial remand.

The CBI registered three cases and arrested four accused. Sudheer Babu is the main accused in all three cases.

He allegedly handed over new currency notes of Rs 2,000 denomination and value of Rs 2.95 crore to the middlemen for a commission.

He had taken the new currency notes from the money sent to the postal department for the exchange of demonetised notes of Rs 1,000 and Rs.500.

The CBI has also booked cases against two office assistant in the office of senior superintendent of post office and officials of three post offices in Hyderabad for committing irregularities in criminal conspiracy with Sudheer Babu.

The investigating agency will be seeking custody of the main accused for further investigations in the case.

The CBI, which has been investigating the irregularities for nearly two weeks, conducted searches at 11 places in the residential and office premises of accused which led to recovery of Incriminating documents, laptops, mobile phones and cash to the tune of Rs 17.02 lakh in new currency notes of Rs 200 denomination.