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An unidentified terrorist was killed on Saturday in the initial exchange of fire with the security forces during a cordon-and-search operation launched by police and the Army at Gundha-Khawas village in the Budhal area.
A police official said a gunfight between the two sides was on when the last reports were received.
Reinforcements of the security forces have plugged all escape routes for the terrorists and efforts are on to neutralise them, the official said.
He said the search operation was launched after police received information about the movement of terrorists in the area.
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Police in Rajouri issued an advisory on Sunday, asking people to stay away from the encounter scene to avoid any casualty.
“It is for the information of all that the operation is in progress with exchange of crossfire in the general area of village Gundha, Khawas. People are advised not to visit the area and remain at a safe distance of at least two km outside the periphery of the area,” the advisory reads.