The arrested have been identified as Sunil Mishra and Shri Chand, residents of Khoda area, police said.
According to police, Sunil, an ex-employee of the steel company, had hatched a plan to extort money from R K Tyagi, who works as manager in the same company.
Sunil hatched a plan with his friends Shri Chand and Aash Mohammad and started making extortion calls to Tyagi demanding Rs 50,000 from him.
"Sunil used to call Tyagi posing as Anil Dujana, a dreaded criminal of Uttar Pradesh, and threatened if he didn't give this amount to him, he would be killed," a police officer said.