Official sources said residents of Loba village under Khairasole police station area attacked a police team with bows, arrows and bombs when it went there to recover an earth-moving machine of a project seized by villagers.
West Bengal Home Secretary Basudeb Banerjee told reporters in Kolkata that 27 policemen and six villagers were injured in the clash.
He said the police did not open fire and showed patience.
Additional Director-General of Police (Law and Order) Surajit Kar Purkayastha told PTI that "an administrative inquiry has been ordered into the incident and Birbhum district SP Rishikesh Meena has been asked to go on leave from tomorrow".
C Muralidhar, Detective Department's Deputy Commissioner of Police (special), has been asked to take charge of Burdwan for the time being, he said.
Leader of the Opposition Surjya Kanta Mishra claimed the police had opened fire.
"There was no reason to open fire but the police resorted to firing," he said in Kolkata and demanded an inquiry into the incident.
Demanding a CBI inquiry, PCC chief Pradip Bhattacharya told reporters that it was necessary to find out whether the police were speaking the truth.
Banerjee said DVC-EMTA was working on a project in the area and there was some dispute with local people after which villagers seized the earth-moving machine.
He said the injured were being treated at Suri hospital and Burdwan Medical College Hospital.
The Home Secretary said the district magistrate has been asked to take steps to resolve the problem through dialogue.
