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Four persons have been arrested so far in connection with the case.
The officials reportedly confiscated the drugs worth crores after encircling the two cars on the National Highway 544.
100 grams of Methamphetamine was confiscated from a trio that had smuggled the drug from Andhra-Odisha border.
The fraudsters posed as members of the anti-narcotics cell and claimed to have intercepted a drug parcel.
The five-member gang was busted in no time by the Kozhikode Police that recovered the van and stolen goods.
The accused, Fathhulla, ran away at the sight of police officers in his residence in Arettachal.
The gang was busted after a chase following a vehicle check in Kozhikode.
The council has also demanded a compensation of Rs 25 lakh for the family of Thamir Jifri.
According to the police, Afsal, 42, was awaiting his regular customers, who were mostly daily-wage workers, when he was arrested.
The drug racket was reportedly operating among school and college students.