One of the Top Lashkar-e-toiba (LeT) commanders Ishfaq Rashid Khan and terrorist Aijaz Ahmad were neutralised by security forces on Saturday during Ranbirgarh encounter.
A search operation was launched in the area after receiving specific inputs.
A source in security forces said there are inputs that two to three terrorists are trapped in the cordon.
"A joint team of security forces including Special Operations Group (SOG) of Jammu Kashmir police, Army and CRPF launched a search operation after specific inputs about the presence of terrorists in the area," the official said.
He added that as the searching party cordoned the suspected spot, the hiding terrorists fired upon the searching party which was retaliated, resulting in an encounter.
"The encounter began at about 8 am. A search operation is going on," Kashmir Zone Police said.
"Op #Ranbirgarh; Panzinara (#Srinagar). Two #terrorists killed. Joint operation in progress," Indian Army`s Northern Command said in a tweet.
Till now, 142 terrorists are killed this year in Kashmir.