Palwinder Singh alias Ghodu, resident of Ball area in Batala; and Sandeep Kumar alias Kaalu alias Shinda, resident of Puriyan Mohalla were apprehended by the Counter Intelligence Unit of Punjab Police.
An official spokesperson said the duo had been tasked with creating political instability in the state by fanning communal passions.
"A huge cache of arms and ammunition was also seized from their possession," he said.
According to police, the module was controlled by Shaminder Singh alias Sherry, who is currently operating from Germany and believed to be in touch with other militant leaders such as Jagdish Singh Bhoora, based in Belgium.
More From This Section
The militants, based in different parts of Europe, are also wanted in criminal cases registered in various police stations of Punjab.
The police have also arrested Sherry's mother Jaswinder Kaur, who was found in possession of two of the seized weapons.
Jaswinder told police that Sherry had visited Punjab on several occasions, the last being in January this year, they said.
Both Ghodu and Kaalu were being aided and abetted by Sherry from Germany, police said.
Further investigation is on in the matter, they added.