Tsegay clocked 59.10 seconds beating the previous record of 59.15 held by Deriba Merga since 2008.
"The competition was good as there were some quality athletes. I am happy to be the champion," said Tsegay after the marathon.
Meanwhile, Kiplagat finished the race with the timing of 1.07.58.
However, women's elite category saw a relatively slow race as winter of Delhi left an impact on the athletes' timing.
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Kiplagat was seen vomiting just after she reached the finishing line.
"I was not feeling well. I pushed myself in the last five kilometres of the race. But it was a nice experience for me," she said.
In a dramatic turn of events, last year's winner Edwin Kipyego finished eighth place.
Former Junior world champion Geoffrey Kipsang of Kenya came second with the timing of 59:30 while his compatriot Wilson Kiprop finished in third position after clocking 59:49 seconds.
Winners of the elite category pocketed a cool sum of Rs 2.5 lakh (USD 25,000).
Among Indian athletes, Preeja Sreedharan was the top finisher after she clocked 1:20:04 in her maiden appearance at the event.
Among the men, G Laxman was the top finisher with a timing of 1:04:44. Athletes made a complaint regarding three sharp turns which they believed left affected their pace.