He has been arrested under several IPC sections including criminal intimidation, police said.
In his complaint, Husseini had alleged that Natarajan and his assistants had allegedly threatened him on June 26 with dire consequences. An assistant of Natarajan had also allegedly threatened the artist with a pistol.
Natarajan had asked Husseini to sculpt a frieze. He intended to install it at the Mullivaaikaal Memorial dedicated to the Tamil victims of the war in Sri Lanka at Thanjavur. Natarajan had allegedly not paid the agreed amount of Rs.98 lakh and had only given Rs.25 lakh to the artist.
As Natarajan did not turn up in response to summons issued based on the complaint, he was arrested, police added.
Natarajan had been arrested in 2012 in a case of alleged land grabbing.
Last year, coinciding with Chief Minister Jayalalithaa's birthday, Husseini sculpted the AIADMK chief's bust by using frozen blood of volunteers.