Azath Sally, 49, the leader of National Unity Alliance was arrested by the police's Crime Investigation Department for his comments last week and served a 90-day detention order under the Prevention of Terrorism Act (PTA).
"He has made a statement in Chennai against Sri Lanka Muslims when all Muslim leaders are currently working with the government to build national unity", Lakshman Hulugalle, the director general of the Media Centre for National Security (MCNS) told reporters.
His arrest has been criticised by the leading human rights group Amnesty International, which called the action indicative of the climate of fear that prevails in the island nation for government critics.
However, the police spokesman Buddika Siriwardena said the police had also received as many as five complaints of financial misappropriation against Sally.
The leader of the main Muslim party, Rauff Hakeem who is also the minister of Justice, criticised Sally's arrest saying it is illegal as the charges under which he was booked were not made available to him.