The National Investigation Agency (NIA) had sought his custody for 10 days from Additional Sessions Judge Rakesh Syal.
Advocate M S Khan, appearing for Sajjad Khan, opposed the agency's demand.
Sajjad Khan (27), a resident of Pulwama was arrested near the Lajpat Rai market late Thursday night.
Mudassir had tasked him with establishing a sleeper cell in Delhi, police said.
Forty Central Reserve Police Force personnel were killed in Jammu and Kashmir's Pulwama district on February 14 after a JeM suicide bomber rammed an explosive-laden vehicle into their bus.