Treason charges carry death sentence or life term in jail under the Pakistani law, legal experts said.
NWFP Information Minister Iftikhar Hussain said the government will investigate the role of Muhammad in the violence in the Swat valley.
The government said Muhammad had earlier announced that he would declare those militants as rebels who do not surrender arms after the introduction of Islamic laws. But he did not honour his commitment.
Muhammad, father-in-law of Maulana Fazalullah, the Swat Taliban chief, has been missing since the security forces launched operation against the militants in early May. He appeared in Peshawar July 26 and was arrested along with his two sons.