The deceased, identified as Sukhdev Mehakarkar, was serving a three-and-half years jail term in a kidnapping and molestation case and had come to Yerawada Central Jail in April this year, said police.
"We have arrested fellow inmate, identified as Dinesh Dabade, who is a murder convict and serving a life term. He has been lodged in the jail for last eight years.
"The incident took place near the barrack this morning, when Mehakarkar was helping other inmates in writing letters to their families. Dabade came with a stone and hit him in the head killing him on the spot," said a police officer attached to Yerawada police station.
Police suspect that today's incident could be a fallout of that argument.
"We have registered a case under section 302 (murder) of the IPC and Dabade has been arrested," he said.