Charanjit, who was held on May 27, alleged his friend Dinesh had sought Rs four lakh from him to escape from police action, claiming that he had "well-established contacts", police said today.
Charanjit claimed he sent the money as demanded through his Delhi-based friend, but since then, Dinesh could not be contacted despite several attempts, they said.
A case has been registered and probe into the matter is on, police said.