Mr Kheny heads the Nandi Infrastructure Corridor Enterprise Limited (NICE), the group building the Bengaluru-Mysuru Infrastructure Corridor.
The project, launched years ago to essentially provide a multi-lane toll highway between the two cities has been slowed down because of land acquisition and allegations of dubious land deals. Former Prime Minister HD Deve Gowda, who was chief minister when the deal was signed in 1995, has been a particularly harsh critic of the project and of Kheny.
Allegations of irregular land acquisition have been investigated, with the matter even reaching the Supreme Court. The Congress government had recommended an investigation into the project.
Corruption has been an issue in the run-up to the assembly polls, and the BJP was quick to take a dig at the Siddaramaiah government.
"Ashok Kheny, who was accused of land grabbing along Mysuru-Bengaluru Highway, was to be jailed by Karnataka CM @siddaramaiah. Instead he has been taken into the Congress," tweeted union minister Prakash Javadekar who is also the BJP in-charge for the Karnataka assembly polls.
The chief minister, who was in Delhi, hit back, taking a swipe at BJP's chief ministerial face BS Yeddyurappa. "Kheny has not gone to jail," he said.
Mr Yeddyurappa, who spent about three weeks in jail in 2011 in connection with a corruption case, was acquitted in 2016.
The state Congress chief, Dr G Parameshwara, said Mr Kheny had been inducted into the party to strengthen the party in the northern Bidar district.
Mr Siddaramaiah has often cited allegations of corruption against former BJP chief minister BS Yeddyurappa, who had to step down from his post after being accused of involvement in illegal mining in Ballari district. The BJP, in turn, has pointed to the raids on DK Shivakumar, power minister in the Congress government.
In election rallies, Prime Minister Narendra Modi and BJP chief Amit Shah have said money sent to the state by the centre has not been reaching beneficiaries in the state due to the "corrupt" state government.