Eastern Highlands police say a man, who was walking towards the Bihute Correctional Institute, stumbled upon the bag which was tightly tied at the top.
The stench led him towards the bag that when he attempted to open it, he caught sight of body parts cut up to fitted into the bag.
The police were alerted and a CID homicide team began investigations, which led to the arrest of a man.
Investigations are still continuing as more suspects are yet to be turned in by the people living in the area.