CTD sources said that seven terrorists were heading to Lahore from Sialkot on a car and a motorcycle when they were signaled to stop, they opened fire at the force personnel.
The law enforcers killed four terrorists in retaliatory fire whereas three saboteurs managed to escape from the scene.
Sources said that one of the killed terrorist has been identified as Abdul Rehman. Slain terrorists are affiliated with an outlawed organization, officials said. They were going to target government buildings in Lahore and Sialkot when the CTD personnel challenged and killed them in encounter.
Two rocket launchers, four hand grenades and one-kilogram explosives were recovered from the killed terrorists.