The accused, Mahesh Thakkar, allegedly demanded Rs 30 lakh from the 40-year-old transport operator on November 16 for not disclosing his unlawful dealings to the police, Rabodi police station's inspector R M Somwanshi said.
He also threatened the businessman with dire consequences if he failed to give the amount, Somwanshi said.
Later, the accused and the transporter negotiated the deal for Rs 10 lakh. Thakkar also allegedly took away Rs 1.5 lakh that the businessman was carrying at that time, he said.
The accused was arrested and booked under IPC sections pertaining to extortion and criminal intimidation, he said.
According to a senior police official, Thakkar was police's panch witness in several cases.