Joint Commissioner of Police (Crime) Ravindra Yadav said Chauhan, along with Delhi Police ASI Mukhtiyar Singh, and five others, had been arrested late last night for allegedly abetting the suicide of the woman.
Today's arrest took the total number of party MLAs arrested so far to 12.
Chauhan and other accused were later sent to one day judicial custody by a magisterial court which ordered their production before the court concerned tomorrow.
The BJP has been alleging that the AAP MLA was responsible for her suicide.
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Reacting sharply to Chauhan's arrest, AAP leader Ashutosh questioned if the Prime Minister "has lost his mental balance".
"Another AAP MLA arrested. Has Modi gone mad? Has he lost his mental balance? If PM acts with such anger/vengeance then is country safe!
Police said there was evidence to prove the MLA was fully
supporting Ramesh Bhardwaj, the main accused, who was arrested from Sonipat on July 26.
They have been arrested under sections 306 (abetment of suicide), 120-B (criminal conspiracy) and 201 (causing disappearance of evidence of offence, or giving false information to screen offender) of IPC and some provisions of the IT Act.
"The victim was terrorised and defamed by the accused in her neighbourhood area to the point that she was forced to commit suicide. We have collected scientific evidence which we will produce in the court," the police official claimed.
The victim had lodged a complaint against Bhardwaj, a fellow party worker and close associate of Chauhan, on the basis of which a molestation case was registered at Narela Police station on June 2.
The victim was apparently depressed by this and when efforts were made allegedly to defame and threaten her and her family, she contacted senior party leaders but was "asked to compromise", the officer said.
The officer claimed there is evidence that the MLA was
involved in the "planning" to "defame and pressurise" the woman to withdraw the molestation case against Bhardwaj and all the accused were following his "directions".
Accused Mohan Verma, Sanjay and Bhardwaj allegedly taped a "fake" conversation which suggested that the woman could be made to "compromise" if paid Rs 15 lakh, police said.
Later, on the basis of the "fake" conversation, the accused lodged four complaints against the woman accusing her of seeking money for withdrawing the case, said the officer.
Also, Mohan had allegedly tricked the woman into watering down her complaint and dropping the molestation charge, on which a case was registered on June 2.
Later, however, after her statement before magistrate non-bailable sections were added to the case, he said.
The accused ASI Mukhtiyar and Virender helped Bhardwaj in securing the bail. Also, while the ASI helped Bhardwaj file complaints against the woman, Virender, earlier jailed in a case under NSA, was roped in to "terrorise" her.
Sharad Chauhan, who was a MCD councillor of BSP, had been fielded as an AAP candidate in the Delhi Assembly elections.
Accused Rajnikant was also close to the MLA and although a teacher, he was allegedly "unofficially" made coordinator of schools in five constituencies by Chauhan, he said.
The woman in a video recording had levelled serious allegations against Bhardwaj, accusing him of pressuring her to "compromise" if she wanted to rise in the party and claimed himself to be "close to the local party MLA".
Her two daughters gave statements to police and a magistrate, added the officer.