According to intelligence inputs, LeT's Kashmir chief Abu Dujana was among those who managed to escape from the encounter site, a police official said.
The encounter broke out as security forces were conducting search operations in Puchal area of Awantipora when firing shots were heard from nearby Goripora village, the official said.
He said reinforcements were immediately rushed to Goripora and a cordon was laid around village to prevent the militants from fleeing.
Two militants were killed in the exchange of firing but five of their accomplices managed to escape, the official said adding the bodies of the slain ultras have been recovered.
As the security forces were battling the militants, a group of local residents started pelting stones at the personnel of law enforcing agencies, the official said.
The diversion in attention of the security forces caused by the stone-pelting incident allowed the other militants to escape from the cordon, the official said.
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Meanwhile, a police spokesperson said that the slain militants were involved in many incidents of violence, including killing of security and police personnel and political activists, grenade attacks on the forces and police installations in South Kashmir.
"They were also involved in threatening general masses to refrain from forthcoming elections and motivating youth to join militant ranks in the general areas of Awantipora, Pulwama and Shopian.