Jayakumar Hiremath, who was sitting at VIP enclave, hurled pamphlets demanding appointment of Lokayukta when Shettar was inspecting the Independence Day parade on a vehicle, police said.
However, the Chief Minister remained unfazed and went on with parade inspection.
Hiremath, an executive committee member of All India Freedom Fighters Sangha, was overpowered and whisked away by police immediately after the incident and arrested, police said.
The post of Lokayukta was lying remained vacant since Sept 19 last year after former Supreme Court Judge Shivaraj Patil, who succeeded high-profile Santosh Hegde, quit in the wake of allegations of getting land allotment in violation of rules.
After his exit, the BJP government recommended the name of former Kerala High Court Chief Justice SR Bannurmath, but the Governor refused to accept it insisting on a "spotless candidate".
On Jul 23, Karnataka High Court had directed the government to begin the process of appointment and rejected its contention that Lokayukta would be appointed after the Supreme Court gave its verdict on a Special Leave Petition challenging the High Court's order of quashing appointment of Justice Chandrashekaraiah as Upa Lokayukta.
It had observed that the issue before the apex court was about the appointment of Upa Lokayukta and the government should initiate consultation on appointing Lokayukta.