Employees of the India Club told Gulf News that Sharad Shetty was murdered as he was entering the club.

"He was in the hall when it happened," said one employee, who requested anonymity. Shetty, who owns two Dubai hotels and heads the Rami Group of Hotels, was allegedly a long-time associate of Dawood Ibrahim.

Shetty who owns the Regent Palace Hotel and the Regal Hotel, had, however, long since parted ways with Dawood and set up his own business enterprise here.

A board meeting of the India Club was taking place at the time of the murder.

A board member said he heard what he thought was a burst of firecrackers at around 8.00pm. Soon after, one of the employees of the club called the board members out of the meeting and informed them of the killing.

The head of the club immediately called the police.

According to one source, a lone gunman went up the stairs of the club and killed Shetty as he was entering the hall to attend a function there.

One of the club employees said that Shetty, who was a member of the club and a regular visitor, had been invited for a dinner hosted by two other club members.

An eyewitness said that the killer, who is believed to be in his mid-30s, fled the scene. "At around 8.30pm Dubai Police cordoned off the club area and forensic team arrived at the scene of the crime," said the eyewitness.

The police were still questioning people in the club late last night.

The victim's wife, identified as Shashikala, was brought out of the club at around 10.45pm. She was supported by another woman and left the club in a police car.

Shetty's murder has shocked the community. In Abu Dhabi, where he also had a number of business interests, including nightclubs, hotel outlets and restaurants, fellow businessmen and associates were reported to be gathering details on the incident from any available source.

The murder was reported prime time on most of the Indian satellite TV channels.

One of Shetty's close associates, who, according to sources, manages his business interests in Abu Dhabi, was in Mumbai when the incident took place.

Sources close to the hotelier said that Shetty had fallen foul of the south Indian underworld gangster, Muthappa Rai, who had been deported from Dubai recently.

Shetty was suspected of tipping off police of Rai's presence here, which led to his subsequent deportation.

Rai's wife and daughter had been briefly detained on their arrival in the UAE.

Shetty leaves behind his widow Shashikala, daughters Swayam and Shraddha and son Sandeep. According to Indian newspaper reports, Shetty's wife and children where questioned by CBI at Bangalore airport on September 2 when they were leaving for Dubai.