Trinamool Congress (TMC) leader Jahangir Khan was arrested near the India-Nepal border in north Bengal on Monday.
He was taken into custody on charges of extortion.
On May 26, the Calcutta High Court had removed interim protection granted to Khan, who has seven FIRs against him at Falta police station in South 24 Parganas district.
"Khan was arrested from the India-Nepal border area in north Bengal," a police officer told PTI.
Contractors accuse former Falta TMC candidate Jahangir Khan of taking cut money for work ordersHowever, no further details of the arrest was provided to the media.
Khan had come fourth in the Falta assembly repoll on May 21, after he had announced withdrawal of his candidature days before the contest. The BJP won the constituency considered TMC's stronghold.
Ahead of the election, civil contractors accused the leader of extorting cut money from them in exchange for work orders.
The contractors claimed that commissions between seven and 10 per cent had to be paid to Khan's personal assistant to execute work orders for various projects.
They further alleged that crores of rupees had collectively been paid as cut money for various work projects and demanded that the money be returned.
(With PTI inputs)