Here are the 10 latest developments in this story:
Mr Chhotepur has denied the allegation calling it a "conspiracy" at a press conference in Chandigarh, and accused AAP chief and Delhi Chief Minister Arvind Kejriwal of being anti-Sikh.
He was being punished by Mr Kejriwal, he said, because he had, "as a true Sikh refused to lie" to the media about not being aware of a youth manifesto released by AAP for Punjab.
But AAP member of parliament Bhagwant Mann said today that Mr Chhotepur is accused of demanding 60 lakh from a candidate and allegedly settling for 26 lakh after negotiation.
AAP leaders from Punjab have sent Mr Kejriwal a video in which Mr Chhotepur, 65, is allegedly seen accepting cash from the candidate. The alleged sting operation has not been made public.
The decision to sack Mr Chhotepur as AAP's Punjab chief was taken in Delhi at a meeting of top leaders on Friday evening.
Mr Mann said a two-member committee would investigate the charges against Mr Chhotepur, who would also be called in to explain his point of view.
Bhagwant Mann rejected Mr Chhotepur's allegation that Mr Kejriwal tried to force him to lie about the youth manifesto. "It is regrettable that he has said he would not be a Sikh if he lied. All this is unwarranted and wrong, why is he raising this now," the AAP lawmaker said.
Punjab Congress chief Amarinder Singh has described Mr Chhotepur as an "honorable and respectful" man with an unblemished career. And alleged that the "sting operation has clearly been conceived, planned and executed as part of an internal coup engineered by AAP leaders."
Mr Chhotepur has been part of both the Akali Dal and the Congress in Punjab, before he teamed up Mr Kejriwal, who asked him to build the party ahead of the elections in Punjab, where AAP hope to replicate its big Delhi win.
Mr Kejriwal has since fallen out with Mr Chhotepur, mainly over selection of candidates for the Punjab elections, sources said. The party has announced two lists of candidates and Mr Chhotepur was missing on both occasions.
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