Biswal and his wife Laxmi Bilasini Biswal were under CBI scanner for over four years over a land deal with the dubious firm.
Biswal, was arrested from his Mahanadi Vihar residence on Tuesday over his alleged links with Seashore Group scam, a major ponzi firm that has allegedly looted over Rs 1,500 crore from small investors.
Earlier in January, the CBI had conducted simultaneous raids at Biswal's residences in Bhubaneswar and Cuttack giving rise to speculation to his arrest.
The MLA was under scanner over selling of piece of land at Benapur Mouza in Jajpur district.
Seashore chairman and managing director (CMD) Prashant Dash had paid Rs 25 lakh for the land in cheques in April 2012. However, Dash had cancelled the deal later and wanted his money back, sources said.
According to the arrested leader, the money was returned to Dash in cash.
Sources said the CBI not was convinced with the clarification of Biswal and said the money was extracted from the chit fund firm in the pretext land selling.
At least half a dozen BJD leaders are allegedly involved in chit fund scam. Earlier, BJD Lok Sabha member Ramachandra Hansda, MLA Prabhat Tripathy and former MLA Subarna Naik were arrested by the investigating agency.
While Prabhat Tripathy is currently out on bail, the two others are still jail. (ANI)