Hawara was caught along with Jaspal Singh alias Raja, the alleged mastermind of the explosions, and his associate Vikas Sehgal, Delhi Police Commissioner K.K. Paul said at a press conference here.
The three were arrested on the Grand Trunk-Karnal Road near the Narela Industrial Area in northwest Delhi at around 6.15 a.m. Wednesday for their alleged involvement in the blasts in the Satyam and Liberty cinemas here that killed one and injured 60.
Hawara was also involved in the assassination of Punjab Chief Minister Beant Singh and had escaped from Burail Jail in January 2004. Hawara, who carries a reward of Rs.500,000, had escaped along with three others by digging a tunnel.
He was coming to Delhi from Punjab along with Jaspal and Vikas when the interstate cell of Delhi Police's crime branch intercepted them.
"They were on their way to Delhi to collect some hawala money. A large cache of explosives was seized from their possession. The three had plans to escape to Nepal," Paul said.
Police seized nearly 10 kg of RDX explosives, three remote control devices, two remote timer switches, two battery operated timers, three detonators apart from several live and used cartridges from their possession.
"It is one of the biggest catches by Delhi Police. We have been in touch with various intelligence agencies in this operation," Paul said.
While Hawara is a resident of Hawara Kalan village in Fatehgarh Sahib district of Punjab, Jaspal hails from Hoshiyarpur district in the same state. Vikas is a resident of west Patel Nagar in Delhi.
Two others - Bahadur Singh, 24, and Gurdeep Singh, 20 - were arrested Sunday in Nawashahar district of Punjab for their alleged involvement in the blasts.
Police had earlier arrested Balwinder Singh and Jagannath in the same case.
"With the arrest of the four main accused - Jaspal, Balwinder, Vikas and Jagannath - the Delhi Police has wrapped up the cinema blasts case. But now we will look into the larger dimensions of the blasts," Paul said.
The twin blasts were seen as a protest against the Sunny Deol starrer "Jo Bole So Nihaal" that was being screened at both cinemas.
Some Sikh groups had demanded a ban on the film, saying its title and some of its scenes had offended their religious sentiments. The movie was pulled out of many theatres across India after the New Delhi blasts.