The deceased was identified as Nur Mohammad, 34, leader of a Rohingya terrorist gang and a Yaba godfather.
Pradip Kumar Das, officer-in-charge of Teknaf Police Station, said they arrested Nur Mohammad from Shalbagan area of the hilly region on Saturday afternoon.
A team, led by officer-in-charge (investigation) ABMS Doha, took Nur with it to recover illegal firearms in the camp around 5:45am.
Nur’s associates and yaba peddlers fired on police and tried to snatch him. The ensuing skirmish left Nur and three policemen -- OC ABMS Doha, constables Ashedul and Antar Chowdhury --injured.
Later, Nur was taken to the Upazila Sadar Hospital where doctors declared him dead, the OC added.
Police also recovered four LGs, a local gun, 18 bullets and 20 bullet shells from the spot.
On August 22, Nur Mohammad held the ear-piercing ceremony of his daughter. The received gifts included one kilogram of gold, Tk 45 lakh in cash and other materials, said OC Pradip Kumar. But it is not clear where the gold and the money have gone.
On Aug 24, two other Rohingya youths, suspects in the Jubo League leader murder case, were killed in a reported gunfight with police in Teknaf upazila.
Jubo League leader Omar Faruk, 30, was shot dead at Jadimura in Teknafupazila allegedly by a group of Rohingya criminals on August 22.
Hundreds of agitated locals stormed a Rohingya camp the following day and vandalised makeshift houses and NGO offices following the murder of the local Jubo League leader.
They burned tyres and plastic boxes to block a five-kilometre road from Teknaf municipality to Leda Point for three hours. The residence of Rohingya leader Nur Mohammad was also torched.