The ruling Biju Janata Dal (BJD) has since suspended the former Dhenkanal legislator from the party.
Nabin's lawyer Asim Kumar confirmed that Nanda was arrested on Saturday evening from the spa on Park Street under the Immoral Trafficking Act and was bailed out on Sunday.
As many as 18 persons, including nine sex workers, were arrested from the spa.
Nabin rubbished any connection with the sex racket and claimed he was detained after he entered the spa during an attempt to chase a pickpocket.
"The allegations regarding involvement in the sex racket and what has been propagated is completely fabricated. I was out for shopping around 7 p.m. on Saturday when my pocket was picked. I chased the miscreants and entered the spa and was caught by a police team that mistook me to be a client," said the former MLA.
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