Mishra also claimed Jain had told him in private conversation that he had "settled" a Rs 50 crore land deal in favour of a relative of the chief minister.
The bombshell prompted calls from the Bharatiya Janata Party and Congress for Kejriwal's ouster, but AAP stood solidly behind its leader, insisting there was no merit in the allegation and that "even his (Kejriwal's) enemies will not believe it".
Mishra, who was Delhi's water resources minister before being sacked, had sided with another top leader Kumar Vishwas in his fight with Kejriwal before the two called truce.
"I saw with my own eyes Satyendra Jain giving Rs 2 crore cash to Arvind Kejriwal at his residence. When I asked Kejriwal, he said such things happen in politics and it will be revealed later," Mishra told reporters after paying homage to Mahatma Gandhi at Rajghat.
"Jain personally told me that he had settled a land deal worth Rs 50 crore of Kejriwal's relative. When I told Kejriwal, he said that it was a lie and asked me to have faith in him," Mishra said.
Image: Kapil Sharma pays homage at Mahatma Gandhi's samadhi at Rajghat, Delhi.