Iqbal Kaskar, is the brother of fugitive don Dawood Ibrahim.
Sharma, who has more than 113 encounters to his credit, was reinstated in the police force less than a month ago and is heading the Anti Extortion Cell of the Thane Police.
"Kaskar and his aides had threatened more than a dozen real estate developers for extortion. There was fear among the builder community and nobody was coming forward to lodge complaint against him and Dawood gang members," an official said.
"As the cleaning campaign (referring to the drive against underworld) by police against these gangs was going on in Mumbai and Thane, Iqbal was running this racket very silently," he added.
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"We got new senior police inspector in the form of Pradeep Sharma in Thane and the responsibility for controlling them was given to him," Param Bir Singh said.
"In the fight against the underworld, Pradeep Sharma is our weapon," Singh said.
"With this operation Sharma and his team has broken the back of the underworld," he claimed.
Sharma, a 1983 batch police officer, was suspended and subsequently dismissed from the services for his alleged connections with the underworld.
He was arrested in Lakhan Bhaiyya fake encounter case in 2010 alongwith 21 other police personnel but was acquitted later.
In the mid of August this year, Sharma was reinstated in the state police force and joined duty in the Director General Control Room, after that he was shifted to Thane Police Commissionerate and is now heading their Anti Extortion Cell.