Civil society activists had gathered at Fowara Chowk intersection yesterday, built at the spot where Singh was hanged by the British on March 23, 1931, to mark his 82nd death anniversary.
They lit candles in front of a large portrait of Singh demanding that the government rename the intersection after Singh and not succumb to pressure from religious extremists.
Describing Singh as a hero of the subcontinent, Abdullah Malik, president of the Bhagat Singh Foundation said: "Since freedom fighters gave the message of tolerance, brotherhood and peace and raised their voices against injustice and unfair distribution of resources, we should follow in their footsteps by struggling for our rights."
The two groups exchanged harsh words with the former insisting the latter should leave the area as they "could not pay tribute to a Hindu freedom fighter".
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However, before the situation could deteriorate, a large police contingent reached the spot. At the request of police officials, the civil society activists dispersed, averting a clash between the two sides.
Malik claimed that he knew who had sent the activists of religious groups to disrupt the gathering.
"There has been no reason to get emotional on the issue. Bhagat Singh was a hero of the independence war which was fought jointly by Hindus, Sikhs and Muslims. There is no need to make it a religious issue," he told PTI.
The hardline groups challenged the move in the Lahore High Court and the case is still pending.