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Assistant Town and Country Planner Shailbala was killed on the spot and Gulab Singh severely injured when the owner of Narayani guest house, Vijay Kumar, opened fire on the demolition team, police said.
The Supreme Court had on April 17 directed the state government to demolish unauthorised structures in 13 hotels in Kasauli and Dharampur areas of Solan, and four teams were constituted for this purpose.
The deceased was heading one team and hotel owners allegedly attempted to intimidate it to stop the demolition drive, officials said.
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The accused fled from the scene soon after and a manhunt was launched to nab him, officials said. Superintendant of Police (Solan) Mohit Chawla said a case was registered against the accused and checking at all interstate barriers was intensified.
Meanwhile, the demolitions teams pulled down the unauthorised constructions and in some cases, hotel owners took the initiative and removed illegal structures on their own.