An alleged Naxal who was carrying a reward of Rs 4 lakh on his head and his associate were captured after an encounter between the rebels and police in the district.
Both men were from neighbouring Chhattisgarh, said district Superintendent of Police Jaidevan A.
A group of 15-odd Naxals opened fire on a police team in a forest under Lanji police station limits, 60 km from the district headquarters, last evening, the SP said.
While the other Naxals managed to flee when the police retaliated, Munnalal Varkade (42) and Indal were caught as they were trying to escape by climbing a hill.
While the Chhattisgarh police had announced a bounty of Rs 3 lakh for Varkade, the Madhya Pradesh police had announced a reward of Rs 1 lakh on his head, the SP said.
Indal carried a reward of Rs 25,000 on his head, announced by the Chhattisgarh police.
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Both hailed from Bhava in Rajnandgaon district.
Varkade was allegedly involved in Naxal activities for the last ten years.
Balaghat, a Naxal-affected district of MP, shares borders with Rajnandgaon of Chhattisgarh and Gondia of Maharashtra.