A joint cordon and search operation (CASO) is being conducted by the security forces in the Awneera village of Jammu and Kashmir's Shopian district.
The army in collaboration with the para commandos was carrying out the operation in Kupwara, comprising forested areas of Kunnad, Kani Behak, Batpora Haihama, Manigah and Chat.
Gun fight broke out between a group of militants and the security forces in Awneera village of Jammu and Kashmir's southern Shopian district on Saturday evening.
Meanwhile, a fierce exchange of fire is going on in the village where three militants are believed to be trapped.
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After the incident, the army and police had launched search operations in the area to track down the militants.
He said that when a cordon was laid and the area surrounded by the security forces, the hidinmg terrorists resorted to heavy firing to break the security cordon and escape.
Seven civilians are reported to have sustained pellet injuries during the clashes and have been shifted to hospital for treatment.
The police have refuted that any mosque was damaged in the encounter. Loud explosions were heard in the area, said locals.