Armed villagers were guarding Balishiha, under Bihaguri police out post, when they stopped the vehicle of the three in the wee hours suspecting them to be the "naked men".
Stating the occupants of the vehicles attacked the villagers first, the sources said the villagers retaliated and all three were killed.
Sonitpur district SP Arabinda Kalita said the three victims -- Ashutosh Das and Md Jalil of Dhekiajuli, and Prabin Bhawal of Rangapara -- were wanted criminals involved in car lifting and stealing of fuel from cars.
The panic has reached such a situation that district Deputy Commissioner Tapan Chandra Sarmah today appealed to the people not to believe in the rumours and also not to guard villages with lethal weapons.
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Sarmah said the district administration would announce through the public address system in all villages to appeal the people not to believe in the rumours.
The DC also said a control room was set up with phone number 9435388282 to deal with the situation.