The encounter began in Jammu and Kashmir's Kupwara district and search operation was going on.
In a separate but related incident, more than 900 people from border villages in the Nowshera sector have migrated to safer places with the assistance of district administration in Rajouri district of Jammu and Kashmir.
"More than 900 people have been evacuated to safer places from Nowshera. Three camps have been established for border migrants. No firing has been reported in Nowshera sector on Sunday," an official said, reported news agency IANS.
"However, today morning shelling from across the LoC (Line of Control) took place in Manjakote and Keri sectors of Rajouri district. No loss of life was reported there so far," the official added.
During the last five days, in Pakistani shelling, along the LoC in the Nowshera sector, three civilians were killed and nine others injured.
26 villages in Nowshera sector of Jammu and Kashmir are affected as a result of ceasefire violation by Pakistan.
"26 villages in Nowshera affected, 4 relief camps established and 26 identified in case more evacuation needed," said on Saturday Shahid Iqbal Choudhary, DC Rajouri, reported ANI.
Ceasefire violation by Pakistan continued on Saturday and people from villages in the border area shifted to safer places.
Two civilians were killed and three injured in Pakistan Army's unprovoked ceasefire violation in Nowshera sector of Jammu and Kashmir on Saturday.
"Pakistani Army initiated indiscriminate firing of small arms, automatics, 82 mm and 120 mm mortars from 0715 hours along the Line of Control (LC) in Nowshera sector," ANI quoted an official statement of the army.
Indian Army posts along the border retaliated strongly.
"Two persons have been killed and three others injured in the firing and shelling by Pakistani Army along LoC in Nowshera belt," Deputy Commissioner (DC) of Rajouri Shahid Iqbal Choudhary told PTI.
On Friday, a BSP trooper was injured in ceasefire violation on the International Border in J&K's Arnia sector. While on Thursday, Pakistan had resorted to heavy firing and shelling on the LoC in Rajouri district killing one civilian and injuring tow others.
These instances of ceasefire violations came days after Pakistan violated ceasefire at the border and entered Indian territory and mutilated two Indian jawans namely Naib Subedar Paramjeet Singh and the BSF's Head Constable Prem Sagar.
The horrendous act was highly condemned by Indian Army which promised suitable action against Pakistan at the right time.
On the other hand, Pakistan Army denied the claims of entering Indian border and harming Indian soldiers.
The Home Ministry in an RTI reply had said that at least one incident of ceasefire violation by Pakistan took place daily along the LoC in Jammu and Kashmir in 2015 and 2016 in which 23 security personnel lost their lives.
As many as 1,142 terror incidents were reported in the state between 2012 and 2016 in which 236 security personnel and 90 civilians were killed, it said in reply to an RTI query filed by a PTI Bhasha corresponde