Babbar had confessed on the controversial reality show that the two started dating after becoming friends on the sets of a Punjabi film.
Minissha, who has been evicted from 'Bigg Boss 8', says there is no truth to what Arya had said.
"We never dated each other. What Arya said is not true.We have been co-stars on many films and then friends but nothing more than that. He was under a lot of pressure when he said that so I forgave him," Minissha told PTI.
The 29-year-old actress was seen telling former contestant Deepshikha Nagpal on the show that Arya asked her to pretend as his girlfriend on the show to garner publicity.
When the show's host Bollywood superstar Salman Khan asked him about Minissha's claim, the actor, admitted he had indeed tried to strategise and also spilled the beans about their alleged past relationship.
Minissha says she was initially upset with the 30-year-old actor but later made peace with him.
"I wanted to stay dignified in the house and I knew if I had stretched the issue, it would have become dirty hence I thought to let it go and move on. I befriended Arya again after that," she said.
There were allegations put by her 'Bigg Boss 8' co-contestant Puneet Issar that Minissha and Arya had planned to stage an affair on the show.
"I kept quiet because I knew the truth. I was surprised that Salman Khan apologised to me as he got to know I had planned nothing with Arya. I was happy that the truth was out," Minissha said.
Reasoning on her exit from the show, Minissha said, "I was nominated with strong competitors so maybe that's why I lost. But I don't have any bitter feelings as the experience has been great. I am out with dignity and positivity and I am happy about that."
Minissha adds that 'Bigg Boss' house is a test of a person's strength and conflicts which happen on the show are unavoidable as all contenstants have different personalities and behavioural patterns.
The actress, who was seen having a love-hate relationship with TV actor Gautam Gulati on the show, says he is misunderstood by other contestants.
"He is definitely misunderstood. He is a good, fun guy and I have no grudge against him even though there were times we did not get along with each other," she said.
When asked who is her bet for the 'Bigg Boss 8' winner, Minissha said it is too early to give a name but she felt in a week or two, a strong contender will emerge on the show.