The accused -- Anup Kumar Tiwari (28) -- was the driver of gangster Deepak Pandit for the last four years, Joint Commissioner of Police (Crime) Ravindra Yadav said.
On the intervening night between August 22 and 23, Pandit and his associates had allegedly shot dead another gangster-turned-property dealer Raju Ramakant Rao at an intersection in South Delhi's BRT corridor.
They first hit Raju's motorbike with their Scorpio SUV, being driven by Anup, and then opened fire at him.
"Yesterday evening, the police arrested him near ISKCON temple where he had come to meet an associate," said Yadav.
After the SUV was chased by a police team, Anup sped the vehicle towards Greater Kailash I and ended up entering a residential lane with no further escape route. After the SUV rammed into an iron gate, the occupants rushed out of the vehicle and scattered around.
While five of the alleged assailants chose to hide in an around a park, and later got pinned down one after another by cops who were helped by locals and security guards, Anup chose to take shelter in the premises of a building, a senior police official of south-east district said.
The police are also yet to recover Rs six lakh in cash, which Raju was reported to be carrying at the time of the incident. They were heading towards southwest Delhi's Tigri village after collecting the cash from a property consultant in outer Delhi.
The police haven't ruled out that one of Raju's associates, who fled the scene during the shootout, could have taken away the bag containing the cash, the official added.
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