The incident took place yesterday evening when commando Dinesh saw the accused assaulting a child and intervened to rescue him.
The accused, a drug addict and often seen in the market area, allegedly pulled out a knife and stabbed Dinesh in his neck and head, a police official said.
People rushed to the policeman's rescue and thrashed the youth too.
The duo were admitted to hospital where their condition is reported to be out of danger, police said, adding that a case under relevant IPC sections has been registered at Lahori Gate police station.