The official, identified as Vinod Pandey, had demanded bribe of Rs 3.5 lakh from the Panchayat Chairman for releasing funds for 48 sanctioned works, which were to be implemented by the panchayat through contractors, Lokayukta Inspector Santosh Kumar Jamra said.
Acting on a tip-off, Lokayukta police laid a trap and caught the accused when he was allegedly accepting the first instalment of Rs one lakh from the Chairman at his residence last night, he said.
The official has alleged that he was framed as part of a conspiracy, the Inspector said.