Dhaliwal, 42, the first Indian-American police officer in Texas, made national headlines when he was allowed to grow a beard and wear a turban on the job.
The Birmingham-based pair, believed to be related as brother and sister, are linked to Sikh Youth UK and were arrested on July 3 by the West Midlands Counter Terrorism Unit (WMCU).
His government had only sent the list of 17 prisoners held under the Terrorist and Disruptive Activities (Prevention) Act (TADA) in Punjab, as required by the Centre, which had taken an independent decision on the release of the prisoners, the Chief Minister said.
Dhaliwal, 42, who made national headlines when he was allowed to grow a beard and wear a turban on the job in the US state of Texas, was gunned down while conducting a mid-day traffic stop in northwest of Houston on Friday.