A Bihar-based gangster, who had allegedly murdered an engineer and a contractor of the Reliance [Get Quote] group in Patna, was shot dead in a pre-dawn encounter in, police said.

Guddu Sharma, 26, was intercepted by police in Patparganj area in east Delhi at around 0130 IST on the basis of a specific information, Joint Commissioner of Police (Special Cell) Karnal Singh said.

When he was challenged, Sharma shot at the policemen using his .38 bore revolver after which they returned fire, the JCP said.

Sharma was taken to a hospital where he was declared dead on arrival. The revolver had been seized.

Sharma and his associates had allegedly gunned down Sanjiv Kumar, an engineer with the Reliance Group, and a contractor Ravi Ranjan in Patna on September 26.

Police said dispute over awarding a contract or refusal to pay extortion money may have been the reason for the killing.

JCP Singh said Sharma had come to Delhi some time ago and was staying in the house of one Satish Sharma in Pandav Nagar area.

Satish had been arrested yesterday but when his house was searched, the gangster was found missing.

Police later laid a trap in Patparganj where the encounter took place, Singh said.

Sharma, a resident of Gaurichak area in Bihar, had 24 cases of murder, loot and extortion registered against him.