The arrested were identified as Jitesh, Ajeesh, Rakhil, Rakesh and Joseph, all young men hailing from different parts of Kerala. The three engineering students were studying in Bangalore.
Speaking to reporters here Saturday, Additional Director General of Police A. Hemachandran said that more arrests are likely to occur in this case.
"It was a well-planned crime. The accused first rented a home in Kochi where they planned the murder. They took mobile connections using fake identification documents. Investigations are on," said Hemachandran.
Harihara Varma, 59, who according to earlier reports was a member of the Mavelikara royal family, was found dead here at his house Dec 24. Varma and his friend, advocate Haridas, received three people who had come to buy diamonds.
According to Haridas, the two were smothered using chloroform. Haridas recovered after a while, to find the group missing along with the diamonds. Varma lay unconscious.
Haridas had immediately informed the police, who arrived to find Varma dead.
Hemachandran said that Varma's antecedents were being probed.
"It has now emerged that the value of the diamonds had been grossly exaggerated. They were estimated at Rs.300 crore. The stones were not precious ones. And it is also clear that this was not the first time Varma was meeting this group," Hemachandran said.
Police say Varma used to deal in precious stones. He also ran a real estate business.
The case had attracted public attention because of the initial reports of the value of the diamonds; leader of opposition V.S. Achuthanandan had demanded a CBI probe to ascertain how the merchant came to possess the diamonds.
Photos: Shraddha Kapoor, Kim Sharma at 'Haseena Parkar' screening
Mumbai to Goa train: First look at the glass-top Vistadome coach
Shuttler Ashwini Ponnappa keeps it short and sexy on social media
Photos: Narendra Modi, others at Marshal Arjan Singh's funeral
Photos: Sussanne Khan and Nimrat Kaur spotted at a spa in Juhu