Davinder Bhati, a resident of Sakipur, was shot dead by the unknown assailants as he was taking refreshments at a store at the market.
After fruit and vegetable vendors in the area alleged that Bhati used to extort money from them, Kasna police had today morning arrested the accused over the charges.
He was released on bail from the police station late in the evening today.
Later, he went with a friend of his to a shop to buy sweets. There, while he was standing on the road when the assailants suddenly arrived in a car and opened fire at him.
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The shooting caused panic among the shopkeepers in the area who downed their shutters and staged a protest over the incident. The irate locals also held up traffic in the area.
The deceased's relatives also held a protest at Kasna police station over the killing.
SSP Preetinder Singh, SP (Rural) Brijesh Kumar Singh, DSP Anurag Singh had to rush to the spot to pacify the mob.
Police said they were looking into the matter.