"We have arrested Sumit Bachewar (41) from Navi Mumbai for his involvement in the murder conspiracy," said Himanshu Roy, Joint Commissioner of Police.
According to police, Bachewar was close to prime suspects Suresh Bijlani and architect Anil Garg, both of whom are absconding now.
Bachewar came in contact with Loharia through a common friend in 2005 and they were jointly into developing plots. However, things turned sour in 2008 and they started filing cases against each other, they said.
The police also said that the contract to kill Loharia was given by former encounter cop Emmanuel Amolik. He promised to pay Rs 2 lakh to accused Vishwakarma Shettiar and even paid Rs 35,000, while another assailant Wazid Qureshi offered his 'service' free of charge to Amolik.
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Police say that had Shettiar not broke coconut on Loharia's head immediately after the murder, he would have survived. The assailants had carried a coconut and garland with them as they believed in this ritual.
Next day, Amolik was arrested for allegedly ordering the killing of the builder, police said.
Investigators said they wanted to interrogate Bijlani and Garg, who has been facing allegations of being part of the group involved in Loharia's murder, by the victim's family.
Police said Amolik had been in touch with Bijlani before and after the murder.