The CCTV footage, aired last night on several channels, showed a young man clad in 'shalwar-qameez' running and several armed policemen chasing him.
The policemen shot the man dead and then placed a pistol near his body to back up their claim that he was a gun-toting robber killed during a shootout.
Punjab Police chief Mohammad Habibur Rehman announced that a departmental inquiry would be conducted into the incident.
"I don't believe in fake encounters and police officials will be taken to task if they are found guilty in this shooting," he said.
DIG (Operations) Tahir Rai said the incident occurred on Friday after two armed robbers snatched a motorcycle from a man near Gulberg Market.
The robbers escaped after seeing a policeman, who immediately alerted the Ghalib Market police station.
When the suspects reached Hali Road, they were confronted by some policemen and this led to an exchange of fire, Rai said.
One of the suspects managed to flee while the other suffered a gunshot wound and ran away after leaving the stolen motorcycle behind.
Rai said the alleged robber then entered Khalid Clinic on Guru Mangat Road and asked for treatment, but ran away when policemen reached the spot.
The policemen chased the alleged robber and killed him in a shootout, Rai contended.
The alleged robber was identified as Moshin Abbas, a resident of Chakwal district.
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