The court sent her to CBI custody for three days. The judge directed the CBI to produce her again before the court on the evening of Dec 1.
Srilakshmi, presently family welfare commissioner in the state, was arrested Monday evening.
The Indian Administrative Service (IAS) official, the fourth accused in the case, allegedly favoured OMC by granting iron ore licence when she was secretary in charge of mines in the Y.S. Rajasekhara Reddy government.
The CBI sought her custody for 15 days on the ground that it wanted to question her regarding various aspects of the case. The CBI counsel said it needed to gather more information about her role and the involvement of other public servants.
Srilakshmi's counsel opposed the investigating agency's plea and pointed out that she always cooperated in the probe by making herself available for questioning whenever she was summoned.
The court sent her to CBI custody for three days while remanding her judicial custody till Dec 12. The CBI sleuths later shifted her to the CBI office at Koti for questioning.
The investigating officers claim to have evidence that Srilakshmi granted iron ore mining lease for 68.5 hectares at Obulpuram in Anantapur district to OMC in violation of rules.
The 1988 batch officer, the wife of Indian Police Service (IPS) officer M. Gopalakrishna, is facing charges of criminal breach of trust by a public servant, criminal conspiracy and cheating.
A visibly shattered Srilakshmi reportedly remained awake through the night in CBI custody. Claiming innocence, she told CBI officials that she signed the files under pressure.
She is the second official to be arrested in the case.
Janardhana Reddy and OMC Managing Director B.V. Srinivasa Reddy were arrested from Bellary in Karnataka Sep 5. Former mines director V.D. Rajagopal was arrested Nov 13. All the three are lodged in Chanchalguda Central Jail.
The IAS officer's arrest came days before the Dec 3 deadline for the CBI to file chargesheet in the case.
The case against OMC was registered in 2009 for illegal mining in Anantapur district bordering Karnataka.