Biswal was picked up late on Monday night from his Cuttack residence and declared arrested on Tuesday morning.
The Cuttack-Chowdwar BJD MLA was quizzed four times earlier in connection with a land deal with the Seashore Group chief Prasant Das, said sources.
His wife Laxmibilasini Biswal was also earlier quizzed by the CBI regarding her involvement in the Jajpur Benapur land scam.
CBI sources said they had sold a land to the Seashore Group for a hefty amount and could not explain the details of the illegal transactions.
The couple failed to produce the documents and sale deeds about the land deal, they said.
Seashore CMD Prashant Dash had paid Rs 25 lakh for the land in cheques in April 2011, the remaining amount was to be paid after registration.
However, Dash had cancelled the deal later and wanted his money back, the sources said.
Biswal was the second BJD MLA to be arrested after Prabhat Tripathy, who is on bail. BJD MP Ramchandra Hansdah was languishing in jail for his alleged involvement in the chit fund scam.
Seashore Group is one of the 44 ponzi companies in Odisha which came under the scanner of the CBI following an order of the Supreme Court to probe their finances and transactions.
The CBI has already filed a chargesheet in the Rs 500 crore Seashore chit fund scam.
Meanwhile, the ruling party said the arrest was politically motivated.
“Centre is using the CBI for political gains. This is vindictive politics. Centre used the CBI against (Trinamool chief) Mamata Banerjee, (Rashtriya Janata Dal supremo) Lalu Prasad and even media promoter Pranoy Roy. Now, it is targeting the BJD,” Subash Singh, BJD leader said.
“How long the chit fund scam investigation will go on? It’s over five years now. The union government’s ulterior motives have been exposed. People will give them a fitting reply,” he added.