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The arrests were made on May 27 during raids at 13 locations in Jabalpur in an operation with the Anti-Terror Squad (ATS) of Madhya Pradesh police.
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Punjab Police arrested a terror operative, Gurbhej Singh, along with 10 pistols and several incriminating documents.
Special Judge Rajesh J Katariya said in the order that there are reasonable grounds for believing that the accusations against the applicant are prima facie true.
The police is investigating the nexus of the terror module with Punjab-based narcotics smugglers and further probe has been set into motion.