The encounter took place between a joint team of Army and police personnel and the militants at Bansbari village under Panbari police station limits, a defence spokesman said.
The joint team had launched an operation at the village last night on the basis of specific information that some militants were moving around in the area.
An AK series rifle, several rounds of ammunition and a grenade were recovered from the spot.
Combing operations were continuing, the spokesman said.
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