Joppan, who was removed from Chandy's office earlier this month, was arrested after day-long grilling by a special police team headed by ADGP Hemachandran, probing the scam.
A top police officer said that the arrest was made in connection with a case registered in Konni in Pathanamthitta district and Joppan will be produced in court on Saturday.
Joppan was summoned to the DySP's office at Chengannur in Alappuzha District on Friday and was questioned for several hours before effecting the arrest, police sources said.
A close personal aide of Chandy for long, Joppan was found to have made frequent phone calls to Saritha Nair, facing charge of cheating many people of huge sums by offering them solar energy solutions.
With the scam breaking out, Chandy removed Joppan and gunman Salim Raj from his personal staff for their suspected links with Saritha and Biju Radhakrishnan, the two accused in the case.
Ever since it came to light, the CPI(M)-led LDF opposition has turned it into a lethal political weapon against the Congress-led UDF Government, demanding Chandy's resignation and a judicial probe into the scam.
Another employee in Chandy's office, Jikkumon Jacob, had resigned earlier this week for his alleged links in the case.