To the Indian schoolboy, it must have seemed like an ingenious if indelicate use of new technology.

But when the 17-year-old used his mobile phone camera to record his girlfriend giving him oral sex he could have had little idea of the far-reaching global consequences.

By yesterday, his ungentlemanly act had provoked a scandal that was dominating every Indian newspaper, the chief executive of a major company had been jailed, and a major diplomatic row was brewing between India and America, with Condoleezza Rice reported to be at the fore.

The boy himself has been tracked down by police, faced court yesterday and has been expelled from his school.

The trouble started a few days after the teenager made the recording, when someone tried to sell a video clip of him and his 16-year-old girlfriend on the Indian online auction site Baazee.com. The firm is a subsidiary of the US auction giant eBay.

On Friday detectives arrested Baazee.com's chief executive, Avnish Bajaj, a US citizen and Harvard graduate. On Saturday a court bundled him off to jail for a week.

Yesterday the police arrested the 17-year-old boy as well.

Both he and his girlfriend were students at the elite Delhi Public School, one of India's most prestigious institutions.

He appeared in a packed juvenile court yesterday - with his face covered - and has been put in the care of a Juvenile Welfare Officer until he appears again tomorrow.

The case has gripped India, a largely conservative country where anything more revealing than a wet sari is generally regarded as culturally unacceptable.

More surprisingly, though, the scandal also appears to have provoked the interest of one of the world's most powerful women.

Ms Rice is understood to have telephoned the US ambassador in India, David Mulford, about the case.

The Bush administration's national security adviser and future secretary of state has let it be known she is furious at Mr Bajaj's humiliating treatment. He is, after all, a US citizen.

"The US embassy is following this case very closely. There is high-level interest in Washington regarding the case," an embassy statement issued over the weekend said.

Mr Bajaj is currently locked up in Delhi's Tihar Jail, India's most infamous prison. He is sleeping on a floor with 70 other untried defendants.

Last night Baazee.com said it was outraged by Mr Bajaj's arrest, not least because he had volunteered to fly to Delhi from Mumbai to help the police inquiry.

The firm said it had taken the video off its site as soon as it became aware of it. Ebay Inc has also condemned the arrest as "outrageous", while India's powerful software industry lobby group has called for Mr Bajaj's immediate release.

"In such a situation, the arrest and detention of Mr Bajaj is uncalled for and not expected in a mature democracy like ours," the National Association of Software and Service Companies said.

The case has even been debated in India's Lok Sabha, or lower house of parliament.

The rightwing Hindu nationalist Bharatiya Janata Party (BJP) - which ruled India until last year and takes a tough line on immorality, especially when it comes from abroad - has condemned the US "interference". America should not meddle in India's internal affairs, BJP MP Lakshman Singh said.

Yesterday Delhi police officials defended their action.

They were merely upholding a comparatively new law preventing the spread of pornographic material, they said. The boy was arrested on Sunday night following a week-long hunt. He had returned to Delhi from a pilgrimage to Nepal with his mother, they added.

"His arrest is key in this case of pornographic images being transmitted to many places. He is the one who started the process of such images being transmitted," Kamal Kant Vyas, additional deputy commissioner of police, told Reuters.

The boy is expected to be charged under the Information Technology Act, passed in 2000, which deals with pornographic materials and their electronic transmission.

The images were copied on video and put on Baazee.com for sale. Many people received them on their camera-enabled mobile phones, the deputy commissioner said.

The circulation of the explicit images has sparked concern among parents and teachers about the increasing use of mobile camera phones by students in city schools across India.

Few could have predicted a case like this, though. India is the world's fastest-growing market for mobile phones, with the current 45 million users expected to double in a year.

The police also arrested an engineering student from a top college in eastern India last week, saying he had posted the video clip on Baazee.com.

Yesterday Pawan Duggal, a supreme court lawyer and cyber law expert, told the Times of India that India's new IT law was "full of loopholes".

"I have highlighted these loopholes several times and I believe the government is in the process of plugging them," he said.

Though public transmission and sale of pornography is a crime, possession and viewing is not. Pornographic videos - often of dire quality - are available in most Indian cities, where there is a flourishing underground trade.