The incident took place last evening under Ratanpuri police station when the accused Zakir Qureshi demanded his money from one Dilnawaz at the latter's house, they said.
The confrontation snowballed into a violent clash in which lathis and fire arms were freely used, police said.
Furkana, a relative of Dilnawaz, was seriously injured in the clash, they said, adding she was rushed to a hospital in serious condition, they said.
Police, however, claimed that she was injured with lathi and not fire arms.
Meanwhile, security has been tightened in the village and additional police has been deployed after the incident.
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