The bike-born duo sped away after being intercepted at a police check-post leading to chase sequence followed by exchange of gunfire.
The police maintained that the trio was involved in militancy, and the evidence establishing their role would be shared with the families.
The last encounter in the Valley took place on December 30, 2020 at Lawapora in the outskirts of Srinagar.
Divyanshu alleged that during the scuffle, his mobile phone and gold chain were also snatched and also alleged that the crowd also manhandled his two PSOs.
Captain Bhoopinder Singh is currently in the custody of the Army, with informed sources saying he may face Court Martial proceedings.
According to security forces, Ajaz Maqbool Ganai, Zubair Ahmad Lone and Athar Mushtaq Wani were killed in an encounter on December 31.
Mushtaq Ahmad, father of 11th class student Athar Mushtaq has dug up an empty grave at his native village of Belou.
Shops in Lal Chowk, adjoining areas, and some parts of downtown Srinagar remained closed in solidarity with the families.
The families of the slain youth have demanded the return of the bodies of their wards for proper burial at their native places and an impartial inquiry into the encounter to ascertain the facts
Masoodi said he told the LG that they have already experienced the bitter Shopian encounter, which turned out to be fake where the three militants that were killed turned out to be poor labourers.
The Army maintained the trio was planning a big attack on the highway. General Officer Commanding (GoC) Kilo Force H S Sahi said they were given ample opportunities to surrender but fired on troops.
National Conference additional spokesperson Sarah Shah said the versions of people and family pertaining to the killing of the three at an encounter site in Srinagar suburb are contradictory.
The security personnel suspended the operation during the night and launched an all-out assault on militant positions in the early hours today.
"Srinagar Encounter Update: 01 unidentified terrorist killed. Operation going on," the Kashmir Zone Police tweeted.
Havildar A K Tomar succumbed to injuries at Army's 92 Base Hospital here. Tomar had sustained grievous injuries during a gunfight with militants in Kanigam area of Shopian on Friday.