"When you totally abuse the rule of laws, this will happen.... This is a lesson for everyone who occupy office as a minister or officer that they should not misuse the office," he told reporters outside Parliament House.
Reddy, who was the Tourism and Infrastructure Development Minister in the previous B S Yeddyurappa government, was arrested today after his name figured among those indicted in Lokayukta report on illegal mining submitted to the Karnataka Government on July 27.
Moily also lashed out at Yeddyurappa, acuusing him of "unabated" and "gross abuse" of authority.
"Instead of CBI hounding him, he was himself hunting .
There was gross abuse of the office of a minister and total abuse of authority by the then Chief Minister and also many of his ministers, which went on unabated," the Minister alleged.
Moily, who is a Lok Sabha MP from Chikkballapur parliamentary seat in Karnataka, said Reddy was dealing with national assets like iron ore which have been "totally abused".
He blamed the state government when asked whether action against Reddy was delayed because the FIR was filed too late.
"The state government should have handled it. The state government itself flouted the role including the top- most person and then unlimately the court, the Lokayukta had to intervene," the Minister said.
Asked whether the spill over of the development could affect Congress leaders as well, Moily said, "Whoever is involved, whichever party he belongs to it, which ever status he belongs to, whichever authority he occupies, I think they have to be strictly dealt with."