The clash erupted in Kupwara town when a large mob of protesters pelted stones on the office of Deputy Commissioner and tried to set ablaze a police picket in the town, 90 kms from here, the officials said.
They said the people were angry over the mysterious death of 32-year-old Nazir Ahmad Mughal, who was picked up by police in connection with a murder case, last week.
The protesters also vandalised the local office of BJP and torched the party flag, the officials said.
Reinforcements have been deployed in the town to restore law and order, the officials said adding "the situation is very tense but under control".
Police yesterday said Mughal, a resident of Gujjar Pati village of Zirhama, was shifted to district hospital Kupwara on Tuesday after he complained of chest pain.
However, the police said he gave slip to cops in the hospital after initial treatment by the doctors.
His body was found near the compound wall of the district hospital yesterday, a police spokesman said.
The local residents did not buy the police version and staged massive demonstrations soon after the body of the deceased was handed over to his family for last rites, alleging that Mughal was tortured to death by the cops.
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