Possi is based in the US and proceedings are on for his extradition. He is wanted for his role in twin bomb blasts at the Jalandhar bus stand in April 2006, in which three people were killed, besides other terror activities.
The police recovered a 7.65 mm auto pistol, a US-made .9 mm pistol, a .32 bore mauser, a .32 bore revolver, a .32 bore country-made revolver, a .315 bore country-made pistol, three magazines and 89 live cartridges.
Jalandhar zone IGP Gurpreet Deo claimed that the arms seizure had prevented a terror attack.
The search operation in Possi village started at around midnight on Wednesday and continued till Thursday morning. The police rummaged around every possible hideout including the cattle shed and fields.
Possi's 75-year-old mother Salinder Kaur and 45-year-old sister Kulwinder Kaur, who were present in the house, were taken into custody. The police, however, did not disclose the place from where Rana was arrested.
Deo said that the weapons had been supplied to Possi's family by Rana. However, it was not clear as to when and from where were the arms smuggled.
"We are investigating that why were the arms being accumulated at a single location and for use in which terror strike," she added, claiming that at least four weapons appeared to be fresh.
She claimed that Kulwinder Kaur's son Daljit Singh, alias Jeetu, who is in Malaysia was also a KZF operative and the police had information that he was trying to infiltrate into India. She claimed that KZF had close links with Babbar Khalsa International (BKI).
"Possi is known to fund terrorist activities from the US. Militant Gurjant Singh, who was arrested in 2010 by the UP police, had revealed that he used to supply arms to militant elements at the behest of Possi," she added.
"It is apparent that militants are not finding support from outside and are now involving their family members," said Deo.
Meanwhile, a case under Arms Act and Unlawful Activities (Prevention) Act has been registered at the Mahilpur police station against KZF ideologue Ranjit Singh Neeta, who is assumed to be in Pakistan, Balwinder Singh Possi, Rana, Salinder Kaur, Kulwinder Kaur and her son Jeetu.