Azad Sally was arrested at his residence in Kolonnawa following several complaints against him, Police Spokesman SP Buddhika Siriwardena was quoted by the Colombo Page as saying.
Sally, the leader of Sri Lanka's newly-formed Muslim Tamil National Alliance and the former Deputy Mayor of the Colombo Municipal Council, has in the past criticised the Buddhist extremist organisation, Bodu Bala Sena.
Meanwhile, Sally's arrest has been criticised by the leading human rights group Amnesty International, which called the action indicative of the climate of fear that prevails in the island nation for government critics.
A few day back, Sally told journalists that he was in hiding after receiving threats from various quarters.
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Sally has accused the government of sponsoring Buddhist nationalist groups in carrying out a series of anti-Muslim campaigns and officials claim he was arrested because of conduct that could damage ethnic harmony.
"He must be immediately released or charged with an internationally recognisable criminal offence," Amnesty International said here today.
"Journalists, the judiciary, human rights workers and opposition politicians like Sally are among those who have been targeted through threats, harassment and vicious violent attacks," she added.