Saif was arrested after he was brought by Mumbai police to the Colaba Police station for interrogation in the case.
A battery of top police officers were waiting for the actor, besides the media and scores of fans outside the police station.
In the afternoon, police sent a team to Saif’s house and after failing to locate him there, had ordered him to appear before it as early as possible.
Saif was virtually declared ‘wanted’ for assaulting South African NRI businessman Iqbal Sharma, who is also the director general and CEO of the Trade, Industry & Investments of South Africa.
The actor has been charged under various sections of the Indian Penal Code for allegedly assaulting Sharma in the Taj Mahal Hotel around 1 a.m. Wednesday morning. Police said a case of assault had been registered at the Colaba police station.
Police are also questioning staff at the hotel and examining the CCTV footage.
Legal experts that the offences for which Saif has been booked are bailable.
Sharma told TimesNow television that Saif called him an "idiot" for complaining about the actor’s loud conduct at a restaurant in the Taj Mahal Hotel.
He said he and his family had requested the restaurant manager to ask Saif and his friends, which included Kareena, Amrita Arora and Malaika Arora Khan, to keep their voices down.
Sharma said he and his family decided to move to another part of the restaurant downstairs.
"As we were going down the stairs, Saif was coming up, probably from the toilet. As he passed me, he called me an idiot and asked ‘Do you know who I am?’"
Sharma said the actor first pushed him and then assaulted his father-in-law who fell on the stairs and bruised his jaw.
"It was an uncivilized way to behave in a public space," Sharma said, adding that he intended to pursue the matter legally.
A police officer confirmed that Sharma and his guests had objected to the noise created by Saif and his friends.
The incident occurred shortly after midnight Tuesday.
Saif has been involved in public spats earlier too, including some photojournalists in Patiala in September 2008.
The actor has won the Padma Shri award, which did not go down well with the Bishnoi community in Rajasthan as he is accused of killing a blackbuck — an animal the Bishnois hold sacred. Saif was charged with poaching as the blackbuck is on the endangered list.