The arrested were identified as Amjath Basha (32), the owner, and Muniyandi (35), the cook.
Residents of Anjinaik village in Arni tehsil consumed food at a funeral on Monday, following which they complained of stomach ache, diarrhoea and vomiting.
The Chengamanad police arrested the owner, Antony Puthussery (64) following a complaint lodged with the District Collector and he was later let off on bail.
Police also said that the five persons fell sick immediately after having dinner on night of July 12 and were shifted to the Government Hospital in Chitradurga.
The incident happened at the shelter home in Ranaghat's Rabindra Sarani area, District Magistrate Partha Ghosh said.
The students who belong to various batches were diagnosed with food poisoning and are currently being treated at the Gandhi Hospital.
In a suspected case of 'food poisoning', around 105 persons were taken ill after they consumed a sweet at a marriage ceremony in Palgarh.
The incident took place in Vidhyavaridhi International Boarding school in Tumkur’s Chikkanayakana Halli.