The gun battle between terrorists holed up in a police station and security forces was continuing even after more than eight hours on Monday, even as the army was called in and the National Security Guard (NSG) commandos were put on standby.
Official sources said the forces' strategy was to minimise casualties and to capture some of the terrorists alive.
"The encounter is still continuing as we do not want any more casualties. Also, the aim is to capture one or more terrorists alive," a senior Punjab police officer present at the spot told IANS.
Though soldiers carrying shoulder-fired rocket launchers and other artillery were present at the spot, security agencies had opted not to use these till afternoon.
The terror attack in this town, about 27 km from Pathankot, began around 5.30 a.m. when four heavily armed terrorists hijacked a car and began shooting indiscriminately at the local bus stand. They then entered a police station and killed those inside.
Unlike the counter-offensive in adjoining Jammu and Kashmir where security forces blow up a building where terrorists are holed up, security agencies here were playing a waiting game to engage the terrorists after securing most of the area where the encounter is taking place.