The Aam Aadmi Party also denied the charges against it and said Kejriwal will remain as New Delhi’s chief minister as it fights the case in court.

The same agency arrested another prominent opposition leader, Hemant Soren, of the Jharkhand Mukti Morcha (JMM) party, on Jan 31 in connection with a money laundering investigation. He denies the charges.

JMM and AAP are both members of a broad coalition called India which has emerged as the main challenger to Mr Modi’s Bharatiya Janata Party.

Rahul Ghandi, an MP from the Congress Party, another member of the India Alliance, on Sunday accused Mr Modi of indulging in “match fixing” at an India rally protesting the arrests on Sunday.

“You want an opposition that is unable to fight elections and this is why you have placed your own people inside the Election Commission, put two Chief Ministers in jail, frozen the bank accounts of the Congress party, and put pressure on the judiciary,” he told a crowd at the Ramlila Maidan in Delhi.

Mr Modi’s party denies using law enforcement agencies to target the opposition and says the agencies act independently.

The BJP on Monday called on India’s election commission to take action against Mr Ghandi for the remarks.