Zulfar Shaikh died on December 2, 2012 when he was in the custody of Dharavi police station for his alleged complicity in the fake currency case.
The police had initially said he died following a heart attack but later said he succumbed to jaundice. However, when Zulfar's lawyer met co-accused Inamul Shaikh in Dharavi police station lock-up, he alleged Zulfar was beaten up brutally by some police officials in his presence, said a petition.
Transferring the probe to CBI, a bench of Justices V M Kanade and P D Kode said enough time had been given to Mumbai Police and they were asking for more time to conduct the investigations.
The court was hearing the petition filed by Zulfar's cousin Nurul Itwari Shaikh.
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This is the second case in the past one month in which probe has been transferred from Mumbai Police to CBI.
In the case of alleged custodial death of Zulfar Shaikh, his lawyer Yug Choudhari argued murder charges should be added against the concerned police officers of Dharavi police station.
The prosecution, however, argued the accused died of meningitis and denied the allegation of death in custody due to assault by police.
The court has asked CBI to submit a progress report on the investigation by August 25.