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The accused, currently residing at a flat on Marine Drive, was arrested on the basis of a complaint by a woman from Thrissur.
The Vizhinjam police have filed a case against the gang, which includes a local taxi driver.
Kasaragod police suspect the decomposing body could be at least five days old.
P V Pradeep, a senior civil police officer, has been suspended by Kannur rural district police chief M Hemalatha.
The accused is Mahesh Kumar (37), hailing from Puthukkudiyiruppu in Tamil Nadu, and presently residing at a rented house in Thattanpeedika, Kanjoor, near Aluva, in Kerala's Ernakulam district.
Soorya, the staff who was stabbed, is currently in the intensive care unit and doctors have suggested surgery. She is reportedly out of danger.
Twelve days after filing a complaint, including the name of the attacker, Venjaramoodu police haven't caught hold of the accused.
The incident happened in the early hours of the day when the DCW chief was out to inspect the state of women's security in Delhi with her team, stationed at some distance from her.
The world championship medallist said she received death threats.
Sajeevan confessed to police that he set the rope used to strangle his wife on fire and that nobody else was involved in the murder.