An unspecified number of militants fired at the security forces in the area which is close to the historic Jama Masjid, triggering an encounter.
Ten security personnel were injured in the militant attack, a police official said, adding, a CRPF commanding officer injured in the attack later succumbed to injuries.
Two militants were killed in the exchange of fire between the two sides.
The attack came as the country is celebrating the 70th Independence Day.
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