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An Army personnel and one of the terrorists were injured in the firing.
“In a joint operation by Army along with police, likely three-four terrorists were intercepted on LoC in Poonch sector while attempting to cross the fence on the night of May 30 and 31, taking advantage of bad weather and heavy rains,” Jammu-based Army PRO Lt Col Devender Anand said in a statement.
After tracking the movement at about 1.30 am, the spokesperson said an Army ambush, on challenging them, was fired upon and in the retaliatory firefight some terrorists have been hit.
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The injured terrorist has been shifted to a civil hospital under police custody.
Officials said the incident took place at forward Karmara village in Gulpur sector after troops guarding the border picked up suspicious movement and challenged the persons which led to a gunfight.
The officials identified the arrested accused as Mohd Farooq (26), who received a bullet injury in his leg, Mohd Riaz (23) and Mohd Zubair (22), all residents of Karmara.
They are believed to have received the arms and narcotic consignment from across the border and were trying to smuggle it into this side when they were intercepted by the troops, the officials said.
The seizure made from the arrested persons included an AK assault rifle, two pistols, six grenades, a 10-kg IED which was planted inside a pressure cooker and 20 packets of suspected heroin worth over Rs 100 crore.
The IED was later neutralised by the experts of the bomb disposal squad, the officials said.
The search operation in the area was still going on when last reports were received, the officials said.