Manish Sisodia, the deputy chief minister of Delhi, was detained by the federal police of India on suspicion of corruption.
After several hours of questioning regarding alleged violations of the city's alcohol policy, the arrest was made.
The policy, which led to the opening of new liquor stores, was later abandoned after police launched an investigation.
The allegations are refuted by Mr. Sisodia and his Aam Aadmi Party, who also charge the ruling BJP with engaging in "dirty politics.".
The Aam Aadmi Party (AAP), which was founded more than ten years ago as a result of a significant anti-corruption movement, is sensitive to issues involving corruption.
It has already taken control of the state of Punjab and the capital city of Delhi and is attempting to establish itself as a major force in opposition to PM Narendra Modi's Hindu nationalist BJP.
The Central Bureau of Investigation (CBI) in India claimed that Mr. Sisodia's arrest was related to their inquiry into Delhi's alcohol laws.
Despite being presented with evidence to the contrary, "he gave evasive answers and did not cooperate [with] the investigation," it read.
"As a result, he was taken into custody. ".
The arrest, according to the AAP, was the result of "political rivalry" and was a "fake case.".
Delhi's chief minister and the leader of the AAP party, Arvind Kejriwal, claimed that Mr. Sisodia was innocent and that the arrest was the result of "dirty politics.".
"Manish's arrest has caused a great deal of anger among the populace. Everyone is being observed. This will elicit a response from people, Kejriwal tweeted.
"This will give us more energy. We'll continue to fight harder.