Two men killed alongside a pair of suspected militants in Indian-administered Kashmir were murdered in "cold blood" by security forces, a relative of one of the dead said Tuesday.

According to police, two suspected rebels were killed the night before during a shootout inside a commercial centre in Srinagar, the territory's main administrative hub.

The building's owner Mohammad Altaf Bhat and tenant Mudasir Ahmed also died in "crossfire", the police added. 

While police had earlier claimed that Bhat was connected to the slain rebels, his niece Saima Bhat said her uncle and Ahmed were civilians who had been murdered in "cold blood".

Clashes between insurgents and Indian government forces in the disputed Himalayan territory -- which is divided with Pakistan -- has claimed the lives of at least 135 militants and three dozen civilians so far this year, including the two men killed Monday.

Saima, a journalist in Srinagar, said that there was no gunfight the night her uncle was killed. 

"He was taken... as a human shield and when they couldn't find anything, he was killed there," she told Kashmirwala, a local newspaper.

Inspector general of police Vijay Kumar had said that both Bhat and Ahmed were working as "terror associates".

"#Terrorists have been hiding on top floor of his building," he was quoted as saying in a statement issued on Twitter late Monday.

Eyewitnesses said army troops and police cordoned off the area on Monday evening, confiscating dozens of phones from shopkeepers and passersby. 

"They later took Mohammad Altaf inside the building for a search and Mudasir also accompanied the soldiers," an eyewitness told AFP on condition of anonymity, fearing police reprisals. 

Police did not return the bodies of Bhat and Ahmed to their families, instead burying them without relatives present in the middle of the night. 

The Peoples Democratic Party, a pro-India political grouping in Kashmir, called for a "speedy investigation" into the murder claims. 

"Least (police) could do is hand over the dead body to the family for a decent burial. Are even dead ones a threat to peace now?" the party wrote on Twitter.

Kashmir has been disputed between India and Pakistan since their independence in 1947. 

Tensions have risen since August 2019 when Hindu-nationalist Prime Minister Narendra Modi's government scrapped the region's semi-autonomy and brought it under New Delhi's direct rule. 

Rebel groups have fought Indian forces for over three decades in a campaign to end Indian rule in Kashmir, with wide support from residents in the Muslim-majority territory.

Police last year began refusing families access to the bodies of slain militants. 

Officials say the practice helps stop "glorification" of anti-India rebels, whose funerals were usually attended by thousands of people.