A decoy operation by plainclothes policemen to nab a gang circulating counterfeit currency failed, when the alleged gangsters who walked into the trap, attacked policemen killing one of them, near Shamirpet on city outskirts on Friday night, police said.

One of the alleged assailants was also killed on the spot when police opened fire and a police officer who sustained knife injuries in the attack was battling for his life in Yashoda Hospital. The slain policeman was identified as Eshwar Rao, hailing from Srikakulam district. The man who fell to police bullets was identified as Mustafa, a resident of Siddipet in Medak district.

Cyberabad police commissioner C.V. Anand said a task force team led by Balanagar DCP was keeping track of a gang suspected to be circulating counterfeit. currency and two members of the gang -- Raghu and Naresh from Siddipet were picked up on Friday afternoon and interrogated. The task force team, which learnt about the gang operations, set up a decoy operation and struck a deal with them for supply of counterfeit currency.

The gangsters set up a rendezvous at Bawarchi Hotel near Majidpur on Rajiv Rahadari, about 50 km here, around midnight. The police team with a dozen plainclothes men rushed there and most of them took positions. The assailants came in a Bolero car and constable Eshwar Rao and SI Venkat Reddy walked up to the Bolero, but perhaps sensing that they walked into a trap, attacked Eshwar and Venkat Reddy with knives, Mr. Anand said.

Eshwar suffered deep wounds on chest and Venkat Reddy too suffered multiple wounds. Reddy, police said, whipped out his service weapon and opened fire killing a gang member. As shots rang out, the other plainclothes men closed in but the gangsters jumped into the Bolero and sped away.

The other team members rushed their injured colleagues to hospital, but Eashwar Rao died on the way. Venkat Reddy was shifted to Yashoda Hosptials, where his condition was stated to be critical.

Mr. Anand said that the counterfeit currency racket is being run by Yellam Goud, a notorious criminal from Karnataka. “We have formed four police teams to nab the absconding persons and will nab them soon,” he said.

Meanwhile, Home Minister, Nayani Narsimha Reddy visited the spot where the incident took place. Later, he went to the Gandhi mortuary and placed a wreath on the body of Eshwar Rao. He also visited the Yashoda Hospital and enquired about the condition of Venkat Reddy.