The owner of the shop suspected that a Rs 1000 note given by two youths was a fake which led to a scuffle which attracted local people to the spot, the sources said.
The currency note was taken to a nearby bank where it was confirmed that it was a fake, the sources said.
While one of the youths ran away, the other was arrested with seven fake notes of Rs 1000 denomination being found in his possession, they added.