Indian police allege that "large amounts" of money was sent from Canada to help Khalistan Commando Force terrorist, Gurusewak Babla escape from police custody.

The money was apparently sent to India through Hawala channels from Canada, the Times of India reported.

Terrorists make extensive use of Hawala which is an underground banking system based on trust whereby money can be made available internationally without actually moving it or leaving a record of the transaction.

Babla, described as a "dreaded terrorist" gave his guards the slip in New Delhi early this month.

At least seven police officers who were guarding him have been arrested on suspicion of negligence and helping in the escape, which has revived fear of militant strikes in the state.

Indian media said Punjab Police were worried about Babla's "hidden agenda," especially because he had escaped in a rather dramatic manner after nearly completing his term of imprisonment.

As a teenager, Babla was inspired and guided by Jarnail Singh Bhindranwale, who was the focus of the Indian raids on Sikh's holiest shrine, the Golden Temple. He has been implicated in more than 48 killings.

Now in his forties, Babla had escaped twice from the police custody in Rajasthan and Delhi, but was re-arrested.

Babla was arrested for the first time in 1986 and is supposed to have served the longest term of imprisonment among the Punjab militants.

The Khalistan Commando Force (KCF), which has a strong presence in Canada, is believed to be responsible for the deaths of thousands of people, many of them police officers and their families in the Punjab.

Like the Babbar Khalsa, the KCF is a Sikh terrorist group demanding a separate homeland in the Indian state of Punjab.

Some segments of B.C.'s Sikh community strongly believe that the KCF was involved in the murder of controversial Surrey newspaper editor Tara Singh Hayer in 1998 and that it collected money to hire assassins for the job.

The Canadian spy agency (CSIS) has been tracking members of the KCF in Canada over the last two decades.

In 1996, Sarabjit Singh Bhatti, a KCF member was deported back to India from Vancouver. Bhatti, then 29 got refugee status by claiming the Indian government was persecuting him because he was a member of the All-India Sikh Students Federation.

Bhatti's refugee status was revoked after CSIS confirmed he was a member of the terrorist group fighting for the independence of the Punjab from India.

In another case, a B.C. woman found murdered in India in 1999 was reportedly part of a terrorist movement which raised funds at Canadian Sikh temples.

Gurbax Kaur, also known as Baksho Kaur Dhillon of Surrey was linked to the Babbar Khalsa and the KCF.

Her family has denied the claims.