The encounter in Rafiabad area started at around 7 AM after security forces launched a search operation following a specific information about presence of militants, police said.
During the search operation, militants fired at the security forces and an encounter ensued, which went on for over nine hours.
"One militant and one army soldier have been killed in the operation," a police official said.
The slain militant has been identified as Riyaz Ahmad, a resident of Brath Kalan in nearby Sopore area, the official said, adding he was affiliated with Hizbul Mujahideen.
Both Najar and Kandoo are believed to have defied the command of Hizbul Mujahideen supremo Syed Salahuddin and have been operating under the shadow name of LeI outfit.
Both the militants carry a bounty of Rs 10 lakh each on their heads.
They are accused of killing six people, including separatist activists and former militants in Sopore town.
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