The baby was handed over to Ananda Bhavan, a child rescue shelter at Malampuzha in this district, they said.
The woman, who gave birth on December 25, alleged that the infant was taken away by her husband and mother-in-law four days later and given to a couple from Pollachi in Tamil Nadu.
The incident came to light after neighbours asked the woman about the child and later informed 'Thanal', an NGO, as she failed to give a convincing reply.
The child was the fifth of the impoverished couple hailing from Kunissery near Alathur in the district.
The baby was rescued from him and Janardhanan was arrested. The child's father, mother, paternal grandmother and another woman, said to be an agent who facilitated the deal, are already in police custody.
The National Human Rights Commission had taken suo motu cognisance of media reports and issued notices to the chief secretaries and senior police officers of Kerala and Tamil Nadu.
The commission, in a statement, said sale and purchase of the infant was "truly a violation" of human rights and the statutory provisions on adoption.
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