The police action came when a large number of block grant teachers were moving from Master Canteen square towards the CM's residence Naveen Niwas, the police said.
The demonstrators broke the police barricade and moved towards Sishu Bhawan square, close to Naveen Niwas, when police resorted to lathi charge to disperse them.
More than a dozen agitating teachers sustained injuries, while many of them were taken into custody, the police said adding, they were compelled to use fore as the teachers broke the cordon without paying heed to warnings.
The situation returned to normal after the demonstrators were chased away and many of them held.
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Deputy Commissioner of Police Satyabrata Bhoi said the situation was under control and necessary steps were taken to maintain peace.
Leaders of the teachers' association alleged the state government has been cheating them for the last 40 days.
Demanding immediate steps to scrap the block grant system, they said the government should ensure full grant-in-aid.
Block grant teachers' association had earlier threatened to stage a rally today in support of their 9-point charter of demands.