Jammu and Kashmir chief minister Omar Abdullah complained to Prime Minister Manmohan Singh against Army's public criticism of him and his government following which Northern Army commander Lt Gen B S Jaswal apologised to him.
The controversy arose after the Army's Northern Command based in Udhampur issued a press release on the encounter that took place on November 29 on the outskirts of Srinagar city.
The press release claimed that the encounter had taken place only because of removing of bunkers by the Omar Abdullah government, who was "compelled to give in" and that it could have "pleased a few hardline separatists and their ISI handlers".
While the Army issued a separate press note later saying that the earlier one should be cancelled and not published, some newspapers did carry it.
"Lt Gen Jaswal spoke to the chief minister and apologised for the error and from his side the matter should be treated as closed," an official spokesperson said.
Omar had written to the Prime Minister protesting army's "interference" in the state government's policy issues.
The state government had conveyed to the Centre that the Army command was working at several levels and trying to create a fear psychosis in certain quarters that if Armed Forces Special Powers Act (AFSPA) was revoked in few areas, the situation in the state would deteriorate.
Omar has been demanding withdrawal or amendment to the AFSPA to make it more humane.