Acting on a tip-off, police stopped a truck, in which the dacoit gang leader Pardi (44) and his two associates were travelling, near a bypass in the Ralamandal area.
The trio tried to run away from the scene by firing at the policemen, in which an assistant sub-inspector (ASI) was injured, they said.
However, in the exchange of fire, a bullet hit Pardi's leg and he fell on the ground, after which he was caught by the police. However, his two associates managed to escape.
Both the injured-- the dacoit as well as the ASI-- were admitted to Maharaj Yashwat Rao Hospital, police said adding that their condition was said to be stable.
Pardi, who had been booked for murder, loot and dacoity, hails from Guna district.
Pardi gang had earlier committed dacoities in Rajasthan, Uttar Pradesh, Haryana along with Madhya Pradesh. He had been wanted by Indore police for a long time for the alleged killing of a timber merchant as well as for many dacoity cases.
Madhya Pradesh government had announced a cash reward of over Rs 25,000 on his head.