This was the first cash seizure in Thane district after the assembly poll schedule for Maharashtra was announced on September 21.
Acting on a tip-off, officers stationed at the Chavindra checkpost spotted a car entering the powerloom town. On searching the vehicle, they found Rs 10 lakh in cash, an official release said.
The driver, identified as Suresh Dharmani, could not provide a satisfactory explanation about the source of the money, it said.
The cash was subsequently seized and deposited in the treasury on the orders of Mohan Naladkar, the returning officer for the Bhiwandi (East) assembly constituency, the release said.
Last week, Thane collector Rajesh Narvekar, who is also the district election officer, had asked officials to keep an eye on movement of cash ahead of the October 21 voting.
He has directed banks to provide proper identification papers and letters to those transporting cash for loading in ATMs.
Narvekar has instructed banks to monitor high-value transactions and report them to authorities concerned.
He has said banks also need to monitor transactions made by friends and family members of the contesting candidates.