Zhang Baoping, 38, the owner of restaurant and his wife were being investigated by police for what the locals described as "an unusual accident causing great calamities."
Another person involved in the restaurant's operation was also questioned.
"They improperly handled the fire situation. They doused a burning cylinder with water, causing it to explode in six minutes. Zhang failed to remove people from the crowded space," state-run Xinhua news agency quoted police as saying.
The fire and explosion occurred at noon on Saturday at the restaurant on Yangjia alley, a popular snack street in the old town of Wuhu City, about 350 kilometers west of Shanghai.
Liquefied gas leaked through a disconnected valve from a cylinder, coming into contact with fire and causing the explosion, the government statement said.
A total of 17 people, including 14 students from two high schools, were eating in the 32-square-meter space. Most of them died of carbon monoxide poisoning.
"The burning cylinder was at the door front and blocked the way out. The people inside the restaurant retreated in face of the flames and had nowhere to escape," Jinghu district fire brigade head Yang Tao said.
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