Haroon Bhatti, a senior member of the LeJ, was arrested with the help of Interpol last month in Dubai and brought to Pakistan.
“Bhatti was being interrogated and during the course of interrogation, the police raided a compound in Lahore of terrorists Wednesday night,” senior local police official Omar Virk told AFP.
He said the militants opened fire on the police from the compound.
Bhatti, who had identified the compound for police, had accompanied them on the raid, he said, adding that the extremist and three other militants were killed inside the compound “in the exchange of fire”.
So-called “encounter” killings like Thursday’s incident have long aroused suspicion among rights activists in Pakistan, who accuse the authorities of using them as a means of disposing of troublesome militants and criminals without going through the courts.
In view of country’s slow legal system that relies heavily on witness testimony rather than crime scene evidence, cases against militants affiliated with groups like LeJ often collapse because there is little protection from intimidation for judges or witnesses.
LeJ has claimed responsibility for some of the most brazen attacks in Pakistan, including a January 2013 bombing in Quetta that killed over a hundred people.
In February 2013, LeJ claimed responsibility for another attack in the same neighbourhood that killed around 80.