Rashid along with his supporters took out a protest march from Batamaloo towards the civil secretariat against the proposed plan.
As soon as the independent MLA from Langate reached the Fire and Emergency headquarters, the police took him into preventive custody and lodged him at police station Shaheedgunj.
Rashid was later taken to his residence in Jawahar Nagar by a police party.
While police officials said, the MLA has been released, Rashid alleged that he was not allowed to leave his home.
"We are against the separate townships. We welcome the Pandits, but they should settle at their native places," he said.