Amid the state of unrest, the Punjab administration introduced Punjab Canal Settlement Bill and Land Transfer Bylaw in the year 1907 which greatly harmed the interests of the farmers. It was totally unjustified. The farmers were already in very bad economic state and sad. The farmers of Rawalpindi and Layalpur were agitated. In the wheat belt anti-government sentiments spread fast. Some farmers requested Lala Lajpat Rai to lead the protest agitation of the farmers. Lala Lajpat Rai was willing to do so. He wrote several articles against the above laws.
The administration suddenly arrested the prominent leaders of the protesting farmers. The arrested persons were to be tried in the court. Lala Lajpat Rai took it as his moral duty to defend the farmers.
He duly arrived in the Rawalpindi court when the arrested leaders were produced before the magistrate for trial. The crowd present in the court went into a loud frenzy as soon as it saw the popular leader there.
Slogans hailing Lala Lajpat Rai and condemning the government rant the court air. It threw the court in disarray. The trial became impossible and hence had to be postponed.
The announcement of the postponement was met by triumphant yelling as if it were a victory. The crowd was jubilant. The administration was shell shocked.
Lala Lajpat Rai was becoming a thorn in the flesh of the British administration. The higher authorities made a move to counter Lajpat Rai threat.
In Rawalpindi, three lawyer friends of Lala Lajpat Rai used to live. They were served notice to present themselves to the District Magistrate on the 2nd May, 1907. The three were charged with issuing speeches that amounted to treason. The three were Lala Gurudas Ram, Hans Raj and Amolak Ram.
Lala Lajpat Rai was informed about it. He rushed to Rawalpindi on 1st May to help out his friends. He met his friends and discussed the situation.
Next day, the three appeared in the court. Lala Lajpat Rai also attended the court. The judge informed them that the investigations in their case had been postponed. The next date of hearing was announced. A large number of supporters of Lala Lajpat Rai had gathered infront of the court. While returning from the court the mob went wild. The residence of the magistrate and the commissioner were ransacked. Many of the rioters were arrested.
The three friends of Lajpat Rai were also taken into custody and refused bail.
Lala Lajpat Rai returned to Lahore. From a reliable source he learnt that his arrest too was imminent. He alerted his father and his own son, Pyarelal.
The police arrested Lalaji and took him to the District Commissioner who formally announced his arrest. The reason of the arrest was not revealed.

Keeping Lalaji in Punjab was risky affair for the government. His presence in his home state could spark the people’s anger. So, Lala Lajpat Rai was despatched to Calcutta that very night of 9th May by a special train. The uncle of Sardar Bhagat Singh, Sardar Ajit Singh was also being sent through the same train to the same destination. They were not told by the authorities of each other’s presence close by.
From Calcutta, Lala Lajpat Rai was shipped to Rangoon to serve sentence in Mandlay Jail far away from home and without trial. The charge recorded on paper against him was treason against the British crown by writing and giving inciting speeches calling for rebellion against the empire.
All the national leaders condemned the act of the administration as an lawless arrogant step. Some opposition members also raised the question of the arrest of Lala Lajpat Rai. They questioned the legality of the action against Lala Lajpat Rai by the government of the British India. An India sympathiser M.P. wanted to know, “I want to ask the honourable Minister for India whether the Act of India empowers the Viceroy of India to arrest any subject of the king of the British empire, shift him from one colonial state to another, to imprison him and to keep him in jail for life without trial in a court of law? Has any other subject been meted out the same treatment? If yes, how many such people are there at present? Are they in jails and for how long?”
All round pressure was building up on the government. The other lawyers arrested at Rawalpindi got released.
From Mandlay jail, Lala Lajpat Rai wrote petitions to the Viceroy of India and the Secretary of India in the British Cabinet. Lalaji pleaded that he was merely a lawyer doing legal practice for more than two decades in Indian courts. The other activity he engaged in was educational and social reforms. So, he argued that how could that work amount to treason against the government? He also mentioned his services as a member of the Municipal Committee and the famine relief services he had rendered to the affected people.
Earlier he requested for the following facilities in jail for him;
1. English and vernacular newspapers for reading.
2. Private servant from his home to look after him.
3. Information on the duration of his jail term.
All the three demands were rejected. The jail superintendent informed him of the government’s decision on 6th August, 1907.
Meanwhile, at domestic front his family suffered badly. Only two months after his arrest, his son-in-law. Dr. Jaichand passed away. Lalaji’s widowed daughter had now become dependent on her father who would help little being in jail. His son, Pyarelal gave up studies. He wanted to start some business.

Six months after his arrest, bowing to the pressure the government had to decide to release Lalaji. On 11th November, 1907 the commissioner, Jail superintendent and his deputy paid a visit to Lala Lajpat Rai’s jail cell to inform, “Mr. Lajpat Rai, you are being released. The police will escort you back to Lahore jail to complete the release formalities. But please remember that you can again be arrested if you again indulge in the acts of treason against the British government.”
He was readied in half an hour and taken to the railway station. After seating him in train to the port the superintendent shook hands with him and said, “Mr. Lajpat Rai, I am extremely happy at getting rid of you. I wish you happiness and good health. Please don’t do any silly thing again.”
Lala Lajpat Rai was brought to Lahore jail.
On 19th November, 1907 Lala Lajpat Rai again became a free man.