The encounter broke out when police assisted by Rashtriya Rifles launched a search operation in Drinard forest area of Heirpora, 60 kms from here, following information about presence of militants, a police officer said.
He said the gunbattle between the two sides lasted several hours but there was no report of any casualty on either side so far.
The firing has stopped from both sides and a search operation was in progress, the officer said.
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