Victim, Bhupendra Virji Veera, was apparently watching television when the attacker entered his house in Santa Cruz and shot him in the head from point blank range, said the police.
Veera is survived by his wife, a daughter and two sons. One of the sons had allegedly been stabbed four years ago.
Former AAP leader Anjali Damania, who had worked closely with Vira, said he was murdered due to his tireless fight against illegal land grabbing.
The murder must have been due to cases of land grabbing filed against Razzak Khan, who is the owner of the building where the deceased stayed.
This led to a dispute between Khan and Veera regarding illegal constructions and land-grabbing in the area. Vira also complained against Khan with the BMC.
The police have filed a case against Razzaq Khan at Vakola police station under Section 302 of Indian Penal Code. He and his son Amjad were arrested on October 17 morning.
Police said they are interrogating Razzak and are probing the case from all angles.