Chieftain of an armed outfit which has named itself as Communist Party of Nepal has been arrested in Sindhupalchowk district, some 100 km north of Kathmandu.

Police detained Sonam Lama, 43, from a hideout in an animal shed in Golche village along with a pistol and 20 homemade guns on Friday, according to media reports on Saturday.

Lama set up the outfit last year and had been extorting money from locals at the gunpoint. He also used to hit people and businessmen who refused to cough up money.

His terror was spread in the northern villages including Pangtang, Gumba, Hagaam and Baramchi on Nepal's border with Tibet of China.

Working on tips, a special team of police from anti-terrorist cell and the local police walked on foot for two hours to reach the remote village where Lama was taking shelter.

"Other members of the group could not be arrested, as they were hiding in different unknown places. Efforts are on to nab them, too," said Deputy Superintendant of Police Pratap Gurung.

Lama's group used to train people on developing improvised explosive devices and spreading terror. Only a few weeks ago, they had attempted to explode bombs in a meeting attended by leaders of the ruling UCPN-Maoist, including Finance Minister Barsaman Pun.

Lama, who was in the most-wanted list of criminals, was made public at the local police office along with the weapons seized in the action.