Raju Kumar alias Raju Pehalwan (33), was arrested on Wednesday from outer Delhi's Siraspur on the basis of a tip- off, they said.
On September 2, Gajendra Bhati was killed and his associate Balbir Singh Chouhan injured when two unidentified motorcycle-borne men fired at them in Ghaziabad's Khoda colony, the police said.
The Uttar Pradesh Police arrested one Narender alias Fauzi on September 11, who revealed that Raju Pehalwan, who belongs to Loni in Ghaziabad, was also involved in the killing.
"The duo had carried out the killing after being asked by ex-MLA of Sahibabad Amarpal Sharma," said Deputy Commissioner of Police (DCP) (Special Cell) Sanjeev Kumar Yadav.
The leader had given them a contract of Rs 10 lakh and Rs 50,000 was paid in advance.
After Fauzi's arrest, the other accused were evading arrests. Non-bailable warrants had been issued against them by the court in Uttar Pradesh, the police said.
On Wednesday, the police came to know that Raju Pehalwan was seen in Siraspur and was planning to change his hideout.
A team comprising of police personnel from Delhi and the Uttar Pradesh Police was constituted.
The accused was spotted at an abandoned bus stop of Siraspur Gurdwara near GT Karnal Road here, the officer said, adding that he tried to flee but was nabbed.
Mr Bhati and his accomplices were charged with an attempt to murder but Raju Pehalwan forced into reaching a compromise with the accused in 2015, said the DCP.
The accused claimed that Mr Bhati kept threatening him and even fired bullets at his sportswear factory in Noida. No case was registered against Mr Bhati since he exercised influence in the area, Raju Pehalwan claimed during an interrogation.
Raju Pehalwan was forced to shut down his business and decided to kill Mr Bhati. Around two months back, he came in touch with Fauzi, a close aide of Sharma, through one Mukesh, Pradhan of Bhoopkheri village in Loni, the officer said.
Mr Sharma had a political rivalry with Bhati and joined hands with him.
Raju Pehalwan revealed that he had been contracted by two people Suraj and Parmod, residents of Loni, for Rs eight lakh to kill a businessman in Sanjeev Nagar.
Mr Bhati has played in various national and international kabaddi tournaments.
Between 2005 and 2009, he represented Uttar Pradesh at national level. He has also been part of the Indian kabaddi team.
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