The activist had sought time from the Prime Minister but his office refused to give him and the disabled people an appointment, Kejriwal said.
The march was organised by Rashtriya Vikalng Party and supported by Kejriwal-led India Against corruption.
The march started from Janpath but was prevented by police after 100 metres at Rajpath crossing.
"Khurshid has insulted the office of Law Minister. B R Ambedkar was once in this seat. A case should be registered against Khurshid and his wife.Till he is declared innocent, he should be out of the Cabinet," he said.
"Both Khurshid and his wife are very powerful people.They will be able to cleanse the evidence.They can put pressure on witnesses. They should be arrested to prevent this," Kejriwal said.
Kejriwal said, "Now let's make this place another Tahrir Square (centre of anti-regime protests in Egypt). Now people should take leave and join the protest.Now its a fight to finish.Prime Minister will have to meet us and accept our demands. Khurshid has to resign.He should be arrested," he said.
More From This Section
The IAC activists are now sitting on a protest near the National Archives on Janpath.
An IAC spokesperson said they would continue their dharna till the time the PM meets them or Khurshid resigns.
Rashtriya Vikalang Party president K K Dikshit demanded that Prime Minister Manmohan Singh dismiss Khurshid from the Cabinet and register a case against him.
Acting on the request of the Law Minister's wife Louise Khurshid, Uttar Pradesh government has begun the process of verifying the handicapped welfare examination report of Zakir Hussain Trust run by the couple for 2009-2010.
In a communication to Louise Khurshid on October 3, Chief Minister Akhilesh Yadav told her that he has forwarded her letter in this regard to the Chief Secretary of the state's Handicapped Welfare Department and she will be apprised of the action taken there of.
KhurshId's wife yesterday came out with a strong denial saying the allegation is "devoid of any merit, and is false, malicious and baseless".
In a statement, she said she herself had requested the UP Chief Minister on September 17 to conduct an inquiry so that "truth is revealed and it is established that the Trust has not forged the signatures of any officers of the state of UP".