The Colva police registered a case under Section 66 (a) of the Information Technology Act against an unknown person in this connection after Fatima Alemao, mother of Valanka Alemao, filed a complaint with them.
Valanka's face was morphed on Balan's picture and uploaded on Facebook, police said.
She had contested the March State Legislative Assembly elections unsuccessfully from Benaulim constituency on the Congress party ticket.
Valanka, also the niece of former Urban Development Works minister Joaquim Alemao, was defeated by Caetan Silva of Goa Vikas Party.