"We have arrested 38-year-old Punit who was driving the car that hit the bike on September 23," said senior police officer Manjit Singh.
A bystander recorded a video that showed the victim, Gurjot Singh, stuck in the wheels and being dragged for about a kilometre. The video, which captured the car's license number, aided the arrest.
Punit, a resident of Gillco valley in Kharar, has been held on charges of rash driving and causing death by negligence.
Gurjot Singh, who hailed from Amroha district in Uttar Pradesh, was studying hotel management at a private university in Landran near Mohali. He was on his motorbike with two friends when he was hit from behind by a car near Chappar Chiri at Landran road. His friends escaped unhurt as they fell by the side.
He was declared dead on arrival by doctors at the Postgraduate Institute of Medical Education and Research.
"Punit admitted to hitting the bike, but said he had no idea that Gurjot got stuck under the car," said the officer.
Punit thought that the car's bumper was damaged in the accident and was making a noise. He told the police that he got scared after hitting the bike which is why he accelerated, the officer said.
Mr Singh's friend Kaushal, who was with him at the time of the accident, identified the car. According to Kaushal, the car driver continued to drive the vehicle despite commuters asking him to stop.