"Raghavji has been arrested from a flat in Koh-e-Fiza locality in old city area of Bhopal where he was hiding," Inspector General (IG) Bhopal Range Upendra Jain told PTI.
The door of the flat was locked from outside and Raghavji was inside, police said.
Acting on a tip-off, police reached the flat some time back and knocked the door. "When nobody responded, police broke open the door and found Raghvaji," the IG said.
After his formal arrest, he is being brought to the Habibganj Police Station, where an FIR against him had been registered two days back.
Soon after the registration of an FIR, Raghavji, who celebrated his 79th birthday on Sunday, went missing from Vidisha.
The FIR was filed by his servant, who alleged that Raghavji abused him for the last three-and-a-half years on the promise of getting him a government job.
Dangi later confided in the suspended BJP leader, Shiv Shankar Pateria about his ordeal, who asked him to record the act.
The victim prepared 22 purported CDs, which showed Raghavji in the act, including one in Rewanchal Express Train.
After the exposure of the CDs, Raghavji resigned from the Cabinet. He was expelled from the BJP on Sunday.
The CDs has left BJP government red-faced which is aiming to score an hat-trick in the assembly elections due later this year.