The accused has been identified as Rajesh Kumar, a driver with the Health Enforcement of NDMC.
Additional commissioner of police of ACB V Renganathan said the accused had been threatening the complainant, who sells momos and chowmein, to remove his cart at Kali Bari Marg at Goal Market.
He demanded Rs 500 from the vendor to allow his business.
The complainant reported the matter to the ACB, following which a trap was laid by the officials and the accused was arrested, Renganathan said.