Three militants of the NSCN-Khaplang faction, including its self-styled finance secretary, were killed in a gunfight with troopers of the Assam Rifles in Nagaland's Zunheboto district on Monday, officials said.
Two 'overground' workers of the outfit were also arrested from two locations, an Assam Rifles official said.
Acting on a tip about the presence of the National Socialist Council of Nagaland-Khaplang militants in Hoshepu village, the troopers conducted a patrol in the area to prevent the outfit from carrying out attacks on security forces.
A fierce gunfight began when the militants travelling in a vehicle opened fired at the troopers.
"One of the three NSCN-K militants killed was identified as L. Tuccu, the 'finance secretary' of the outfit and another overground worker of the outfit was arrested," said Assam Rifles spokesman Shailesh.
He said the killing of Tuccu was be a major setback for the NSCN-K, since he was controlling the entire financial transactions of the outfit in Nagaland.
An AK-47 rifle with magazine, ammunition, radio sets, and incriminating documents were recovered from the militants' vehicle.
Following the arrest of the overground worker, the Assam Rifles troopers also raided a Tuccu's farmhouse, where another overground worker was nabbed, and a 12 bore rifle and a large quantity of ammunition were seized from him, Shailesh said.
The troopers also rescued from Tuccu's farmhouse an Assamese labourer who was kidnapped by Tuccu earlier this year, he said.
The Indian government recently banned NSCN-K for five years.