On January 31, the body of Ram Sunder, a resident of Bihar's Aara district, was found in a field by the Phagwara- Mukandpur road, they said.
Sundar used to work at a factory in Phagwara and also lent money on interest to migratory labourers, they said.
He was last seen leaving home to meet Lakshman Sharma, a resident of Bihar currently living in Phagwara, on January 29, police said.
Based on this information, police nabbed Raj Kumar, Lakshman Sharma and Bablu Gupta in connection with the killing, they added.
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The accused asked Sunder to come to Lakshman's residence on the pretext of returning him his money, police said.
They later took him to a secluded place, got him inebriated and then strangulated him with a plastic rope, the police said, adding that the accused disposed of the body, and kept his purse and mobile phone so as to conceal his identity.