The accused, identified as Pradeep alias Fauji (31), was a boxer and had joined the army in 2004 under the sports quota.
He quit the army in 2007 and became the private security guard for a builder. He later forayed into the real estate business himself, said police.
He allegedly committed the murder two months back following an argument with the victim at a city court, they said, adding that the arrest took place on Wednesday when he had come to meet his wife, mother and ailing brother at his residence here.
Police said they had raided several locations in Agra, Hardwar, Rohtak and Gurgaon on the hunt for Fauji before his eventual arrest.
"The accused Pradeep Fauji is now in police custody and further investigation is on," said DCP (southwest), RA Sanjeev.