Comrade Datta Isawalkar and 27 others were arrested at 2.30 PM near the Chief Minister's bungalow and taken to the Lamington Road police station, the official said.
Additional Commissioner of Police (South Region) Krishna Prakash said that the protestors had no permission to assemble near the house where the group had reached in taxis for the illegal gathering.
"We have not lathi-charged anyone," he said.
An activist at the protest venue said neither the number of houses for mill workers nor how they would be distributed is being discussed by the Maharashtra government.
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"The number of houses are not adequate. There are 1.5 lakh beneficiaries though there are only 7,000 houses," activist Shweta Damle told reporters.
Labour leader and editor of Marathi newspaper Jayshree Khadilkar said the chief minister has not bothered to give a time to discuss the issue.