"Jain will file a defamation case against him (Mishra) for making baseless allegations of corruption," the official said.
The Aam Aadmi Party has suspended Mr Mishra from the party's primary membership. The decision was taken by its high-powered Political Affairs Committee (PAC) chaired by Chief Minister Kejriwal.
"From yesterday, I am seeing, how much will Kapilji lie? There is limit to it. He is levelling all kinds of allegations... On Friday (May 5) I wasn't even present with the CM, so how can there be a talk of the deal. There is limit to foolishness," the Health Minister said.
Mr Jain said Mr Mishra had "lost his mental balance" and was thus "speaking nonsense".
Delhi's ruling AAP, which is struggling to steady itself after the shock defeat in the municipal elections, was yesterday hit by a scandal with Mr Mishra accusing Chief Minister Kejriwal of accepting Rs 2 crore from Mr Jain.
Mr Mishra, who was sacked as water minister on Saturday, has alleged that he was an "eyewitness" to the health and PWD minister handing over the money to Mr Kejriwal.
The health minister alleged the BJP has been "after me" for quite some time and have "even spawned jokes", and this issue was just "another attempt".
Mr Mishra has also alleged that Mr Kejriwal had delayed the probe into a Rs 400 crore tanker scam, and today submitted documents to the Anti-Corruption Branch (ACB) to back his claim.
"He (Mishra) is making corruption allegation against Arvind Kejriwal, perhaps one of the most honest politicians, we know of. He is accusing Kejriwal of indulging in corruption, whose honesty has attracted thousands of workers to join him.
"If he (Mishra) has proof, he should show the documents. He should go to anti-graft bodies, why is he going to media? This is just an attempt to distract and threaten," Mr Jain said.
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