The CBI on Sunday arrested Delhi's Deputy Chief Minister Manish Sisodia in connection with alleged corruption in the now-scrapped excise policy relating to the sale of alcohol, in a move that could plunge the national capital into a governance crisis and further widen the political rift between the AAP and the BJP-led Central government.

Sisodia's arrest, one of the highest-profile actions against an opposition leader, comes after that of Satyendar Jain, Delhi's the then health minister, in June last year. Both ministers have led what the Aam Aadmi Party describes as the successful transformation of Delhi's education and health services, contributing to the party's popularity and continued electoral success.

Their absence in the government would leave Delhi CM Arvind Kejriwal with no heavyweight lieutenant to implement his governance agenda in Delhi.

Sisodia was arrested after nearly eight hours of questioning on various aspects of the excise policy for 2021-22, which the probe agency says suffered from irregularities both in its formulation and implementation, allegedly intended to benefit people with links to the AAP.

The CBI investigators were not satisfied with Sisodia's answers, an agency official said, adding he was not cooperating in the investigation and avoided clarifications sought on crucial points.

"He gave evasive replies and did not cooperate in the investigation despite being confronted with evidence to the contrary. Therefore, he has been arrested," the CBI said in a statement.

Reacting to Sisodia's arrest, Kejriwal said the deputy chief minister was innocent and his arrest was "dirty politics".

"Manish is innocent. His arrest is dirty politics. His arrest has angered people quite a lot. People are watching everything. People now understand everything and will give reply to this. It will boost our spirit and our struggle will only get stronger," Kejriwal said in a tweet in Hindi.

In a statement, the CBI said Sisodia was issued a notice under CrPC section 41A to attend the investigation on February 19.

"However, he sought time of one week citing his preoccupation. Accepting his request, he was issued a notice for attending the investigation on February 26 for answering various questions evaded by him during his examination on October 17, 2022, and further questions relating to his incriminating role based on evidence collected during the investigation of the case," the agency said.

Before leaving for a second round of questioning by the CBI, Sisodia had, earlier in the day, expressed apprehension that he may be arrested.

"I can go to jail several times and I am not afraid. When I left my job as a journalist, my wife supported me. Even today, my family is standing by my side. My workers will take care of my family if I get arrested," Sisodia told reporters at Raj Ghat.

Sisodia, who also holds the finance portfolio in the Delhi Cabinet, was originally summoned last Sunday but he sought deferment of his questioning citing the ongoing Budget exercise, following which, the CBI had asked him to appear on February 26.

This was the second round of questioning of Sisodia after the agency registered a case on August 17 last year. He was quizzed on October 17 last year.

The Aam Admi Party leader will be put through a routine medical examination by a government doctor before being put in the lock-up where he will spend the night. He will be produced before a designated court Monday.

AAP Rajya Sabha MP Sanjay Singh described Sisodia's arrest as the "height of dictatorship".

The day began with Sisodia paying tribute to Mahatma Gandhi at Rajghat before arriving at the agency headquarters along with his supporters who were stopped at the barricades raised by Delhi Police.

The concrete and glass CBI headquarters was turned into an impregnable fortress by Delhi Police by raising four layers of barricades and several personnel on the JLN Stadium Road since 1 am, officials said.

Media personnel and everyday passersby were stopped at the SCOPE Complex gate, around 500 meters from the CBI Headquarters, to prevent any protests or breakdown of law and order.

Sisodia, who also held the charge of the Excise department, was not mentioned as accused in the charge sheet filed in the case on November 25 last year. According to officials, the CBI had not named Sisodia in the charge sheet as the central probe agency kept the probe open against him and other suspects and accused.

In the FIR, the CBI has booked him under IPC sections 120-B (punishment of criminal conspiracy) and 477A (falsification of accounts) and provisions of the Prevention Of Corruption Act including Section 7 (taking undue advantage to influence a public servant by corrupt or illegal means or by the exercise of personal influence).

Along with Sisodia, the CBI had also named Arva Gopi Krishna, the then commissioner (excise); Anand Tiwari, the then deputy commissioner (excise); Pankaj Bhatnagar, assistant commissioner (excise); Vijay Nair, former CEO, Only Much Louder, an entertainment and event management company; Manoj Rai, ex-employee of Pernod Ricard; Amandeep Dhal, director, Brindco Sales Pvt. Ltd; Sameer Mahendru, managing director, Indospirit Group, as accused in the FIR.

It is alleged that the Delhi government's excise policy for 2021-22 to grant licences to liquor traders favoured certain dealers who had allegedly paid bribes for it, a charge strongly refuted by the AAP. The policy was later scrapped.

"It was further alleged that irregularities were committed including modifications in Excise Policy, extending undue favours to the licensees, waiver/reduction in licence fee, the extension of L-1 license without approval etc. "It was also alleged that illegal gains on the count of these acts were diverted to concerned public servants by private parties by making false entries in their books of accounts," a CBI spokesperson had said. Recently, the CBI arrested Butchibabu Gorantla, a former chartered accountant of K Kavitha, a BRS MLC in Telangana and a daughter of Chief Minister K Chandrasekhar Rao. It is alleged that Babu had met several accused named in the FIR in Delhi, Hyderabad, and Mumbai and was one of the prime negotiators from the South Lobby, which wanted to swing policy in its favour.

The CBI had also questioned Kavitha in connection with the case in December last year. During its probe, the CBI had found evidence that Babu acted on behalf of the South Lobby comprising the Telangana MLC, Yuvajana Sramika Rythu Congress Party MP Magunta Srinivasulu Reddy, and Aurobindo Pharma's P Sarat Chandra Reddy.