ISLAMABAD - Pakistan said on Saturday it was investigating an Islamist militant leader whom India accuses of masterminding last year's Mumbai attack, but said he would be arrested only after concrete evidence was found against him.

India wants Pakistan to prosecute Hafiz Mohammad Saeed, founder of the outlawed Lashkar-e-Taiba militant group, before it resumes a peace process broken off after last November's attack that killed 166 people.

Hafiz Saeed is being investigated. He has been included in the investigation, Interior Minister Rehman Malik told reporters.

Pakistani police raised the possibility of arresting Saeed on Friday by saying they had lodged two complaints against him for delivering a speech on jihad, or Muslim holy war, and appealing for funds for his banned charity, Jammat-ud-Dawa.

Indian Home Minister Palaniappan Chidambaram said on Friday that even if Saeed were arrested on another charge, it would represent significant progress provided Pakistan took the opportunity to question him over the Mumbai attack.

Malik said Saeed would be arrested after availability of solid evidence against him.

I assure my Indian counterpart that if there was evidence against (him) during our investigation, I assure you he will not get out of clutches of law. We will take action.

Malik's remarks are likely to help ease fraught relations between the two nuclear-armed rivals as their foreign ministers and top diplomats prepare to meet on the margins of the United Nations General Assembly in New York on September 26.

Pakistan and India have held three bilateral meetings on the sidelines of international gatherings since June but New Delhi insists that Pakistan take forceful action against Saeed and other suspects before it resumes formal talks under the peace process launched in 2004.

Pakistan detained Saeed in December after a U.N. Security Council resolution put him and his charity on a list of people and organizations supporting al Qaeda.

But a court released him in June on grounds of insufficient evidence, prompting the Pakistani government to appeal at the Supreme Court for his re-arrest. The case is pending.

Pakistan has acknowledged that the Mumbai attack was plotted and partly launched from its soil and has been holding a trial of seven suspects behind closed doors in a jail in Rawalpindi, the garrison town next to Islamabad.

The court adjourned the case until September 24 after hearing the case on Saturday.

Malik said the court is expected to frame charges against the suspects at the next hearing.

(Reporting by Zeeshan Haider; Editing by Mike Peacock)

Pakistan India