Kadam, a senior Shiv Sena leader, is the minister for Environment.
Mahesh Sawant, typist-cum-clerk was working at Kadam's residential office here. He called up a few people using the official phone and demanded money from them, a senior police official said.
When the minister came to know about Sawant's actions, he informed the police, the officer said.
A complaint was lodged at the Malabar Hill police station in South Mumbai on Friday. Police arrested Sawant on the same day, the official added.
The accused has been booked under section 384 (extortion) of the IPC, he added.