Assistant Police Inspector Namdev Sukhdev Kauthale, posted with local Crime Branch, was arrested by CBI in connection with the murder of the activist.
He was taken into custody after his alleged role surfaced during the questioning of B R Andhalkar, the then police inspector also with local crime branch, who was arrested on April 6 for allegedly conspiring with others in the murder of Shetty on January 13, 2010.
CBI, which had initially closed the case, decided to reopen it after the agency recovered certain documents, indicative of possible missing evidence in the murder case, from a builder whose offices and residence were searched in January, 2015 in a separate case registered in November, 2014 against a builder.
Shetty was murdered by unidentified assailants when he had stepped out of his house for morning walk at Talegaon Dabhade town in Pune district.
The unidentified men had attacked him with swords. A year before he was killed, Shetty had reportedly lodged a complaint with Pune polices crime branch about an alleged land scam involving IRB chairman Virendra Mhaiskar.