According to the police, the Pydhonie merchant, whose name has been withheld due to security reasons, received threats from an unknown caller between March 30 and April 3 demanding Rs 20 lakh as protection money. The businessman was threatened with murder if he failed pay up, police said.

Matters came to a head yesterday when the extortionist sent a threatening letter demanding the money. The businessman was instructed to hand over the money at a specified spot at Chowpatti. The time, he was told, would be indicated later, the police added.

Acting on this information, Anti-Extortion Cell officers laid a trap at the place of rendezvous. As the watchers stood guard, a man was noticed accosting the businessman. He was instantly overpowered by the sleuths even as he tried to force the victim into a taxi.

The accused was later identifiedas Yunus Bashir Sheikh (25). Three of his associates, Kausauddin Mohinuddin Sayed (25), Firoz Khwaja Moinuddin Sheikh and Abdul Kadir Sheikh, were later arrested from a hideout at Govandi in North East Mumbai this evening.

Investigations revealed that Kausauddin Sayed was a former employee of the cloth merchant and was the key conspirator in the extortion drama. All four have been remanded to police custody till April 17.