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The militant, Riyaz Naikoo, 35, was the senior most active commander in Kashmir and had taken over reins of the banned terror outfit following death of Burhan Wani, the poster boy of militancy in the Valley, in July 2016.
As precautionary measures, mobile internet services were suspended and strict restrictions imposed on the movement of people.
A police spokesperson said earlier in the morning that a top terrorist commander along with an accomplice was trapped in an encounter but did not reveal his identity.
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Naikoo had managed to escape the police dragnet thrice in Shopian in south Kashmir.