Top Lashkar-e-Taiba bomb expert Abdul Karim Tunda told interrogators that he had come in contact with Pakistan's spy agency ISI after meeting former ISI chief Hamid Gul in 1995 and was in constant touch with him thereafter.
Delhi Police officials said Tunda, a close aide of underworld don Dawood Ibrahim, had met Gul after reaching Pakistan via Saudi Arabia.
Investigators said the 70-year-old terrorist has told them that that ISI was the official arm which has got several other "tanzeems" (organisations) like LeT, Jamaat-ud-Dawa under its umbrella to carry out various tasks. The handlers call these tanzeems as social organisations.
Tunda, who was holding a Pakistani passport with the name Abdul Quddus, was arrested on Friday from an area on the Indo-Nepal border after being on the run in several countries for 19 years.
During his stay in Pakistan, Tunda told the police he had been in touch with organisations like ISI, LeT, Jaish-e- Mohammed, Indian Mujahiddin and Babbar Khalsa and had been meeting people like Hafiz Saeed, Maulana Masood Azhar, Zaki-ur-Rehman Lakhvi, Dawood Ibrahim and several others wanted by India.
"Tunda has told us that most of the current LeT operatives are Punjabis. They are paid a meager sum of Rs 3000-4000 per month," said a senior police official.
However, Gul who served as the director general of ISI from 1987 to 1989, rubbished these claims.
"I retired from ISI on June 1 1989. Tunda has claimed to know me in 1995, by that time I was retired from service. I don't know Dawood Ibrahim. I don't know Tunda. I don't like his name, if I would have met him I would have asked him to change his name," Gul said.
"Indian media is going completely head over heals... In intelligence terms, it is called paper milling, people make up funny stories. I am prepared to go before any investigation team," he said.
Tunda will be produced before a local court on Tuesday by the Delhi Police which will seek his custody for further interrogation, the official said.
The official said that Tunda has got trained men, who were his disciples in the madarsas run by him. They may have infiltrated to India.
Delhi police officials, terming scope of his interrogation a 'vast canvas', said they are currently concentrating on collecting information from him on the networks and structure of various anti-India organisations in Pakistan.
Tunda, who once worked as a carpenter, scrap dealer and a cloth merchant, now has his terror outfits in both Karachi and Lahore. He used to stay in Lahore with his three wives, police sources said.
"Tunda doesn't say he is involved in the business of Fake Indian Currency Notes (FICN) but he knows everybody. He has admitted to have met Iqbal Kana – the fake currency kingpin handled by ISI," police said.
Meanwhile, the home ministry has complimented the Delhi Police and central security agencies for arresting Tunda.
"It was an extremely good work done by the agencies and Delhi Police. It demonstrates the excellent synergy among all organisations," Union home secretary Anil Goswami told reporters in New Delhi.
The home secretary said the ministry was looking forward for more such successes in the future.
"We hope more successes will be achieved by all of them working in tandem in the future too," he said.