According to reports, one person was killed in the blast that hit a village in Jammu and Kashmir's Kulgam. The injured ones were taken to the hospital.
Watch: Stone-pelters attack Army vehicles in Kulgam
Police sources said security forces started a cordon and search operation in Gopalpora village of Kulgam district after receiving reports about the presence of militants there.
Mohammad Ayoub Rather, a resident of Yaripora, was arrested.
Any casualties in the incident were still not known.
Arms and ammunition were recovered from the encounter site, the official said, adding that no collateral damage has been reported.
A police official told PTI that the search operation turned into an encounter after the militants fired upon the forces.
The area has been cordoned off and a combing operation is underway to nab the attackers.
J&K: Kashmir bandh today over death of 7 civilians in Kulgam
The encounter which started late on Friday night in Chowgam area of Qazigund is still underway.
The SPO was declared brought dead after he was taken to the hospital.
J&K: Terrorists rob Rs 6 lakh from SBI bank in Kulgam
In a bid to avenge the death of Constable Saleem Shah, security forces on Sunday gunned down at least three terrorists, involved in his abduction and murder yesterday.
Saleem was abducted by terrorists from his residence in Mutalhama area of Kulgam district in south Kashmir on July 20.
J-K: Encounter underway between security forces and terrorists in Kulgam district
The bullet-riddled body of constable Saleem Shah, the Jammu and Kashmir policeman who was abducted by terrorists from his residence Friday night, was found in Kulgam on Saturday.
Constable Saleem Shah was abducted from his residence in the Mutalhama area of Kulgam district in south Kashmir last night, he said.
Clashes broke out between protestors and security forces in Hawoora Mishipora village in Qoimoh area of Kulgam in south Kashmir, a police official said here.
Constable Javaid Ahmad Dar was reportedly kidnapped by three men from Shopian while he was on his way to a local chemist on Thursday (July 5).
Around 250-275 active militants in Kashmir Valley, says Lt. General Anil Kumar Bhatt.
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