The court is looking at whether terror charges can be invoked under the Unlawful Activities Prevention Act and other stringent anti-terror laws under the provisions of the Indian Penal Code.
The two-judge bench said, ''We feel that there's possibly a national security angle. Therefore, can't this matter be probed under provisions other than the Prevention of Money Laundering Act, Passport Act and FEMA? Why not the Prevention of Terror Act or POTA?''
It also expressed displeasure at the way the investigations against Hasan Ali have been handled and asked the government on Tuesday why the case should not be handed over to the CBI, "given the magnitude of the case."
Mr Khan was arrested late last night for money-laundering after he was brought from Pune to Mumbai for questioning. He was remanded to the Enforcement Directorate's custody for one day by a Mumbai court today. He declared this morning, "I am a victim of a political conspiracy..I am innocent." (Watch)
The government submitted it status report to the Supreme Court today. The report said there seemed to be national security concerns in the charges against Mr Khan, who the government has alleged holds eight million dollars of black money in Swiss banks. The businessman from Pune has been accused of owning multiple passports, and sources say his transactions suggest links to international arms dealers.
Investigating agencies claim to have found bank transactions which show that arms dealer Adnan Khashoggi transferred $ 300 million to Hasan Ali's foreign account. They also claim to have an affidavit addressed to Khashoggi signed by Hasan Ali. Investigators are also looking into $ 280 million allegedly invested by Ali in two offshore companies floated by him.
Mr Khan has been asked by the government to pay Rs 70,000 crore for tax evasion - but has yet to make any payments. Mr Khan says he has no black money.
The case against Mr Khan dates back to 2007 when the Income Tax department raided his home. Since then, different agencies have been scrutinizing his business dealings.
Last week, Mr Khan's case provoked the Supreme Court's wrath, which has been prodding the government to sharpen its inquiry into the source of black money. "What the hell is going on?" asked a judge. The court also asked why Mr Khan was not being interrogated while in custody - which prompted his arrest last night.
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