"The more the government harden its stand , the more suspicion it might create," a bench comprising Chief Justice A P Shah and Justice Neeraj Kishan Kaul said when the Additional Solicitor General vehemently opposed the idea of conducting the probe in the case in which two suspected terrorists and a police inspector were killed.

"It is to bring transparency by conducting such an inquiry....This is the minimum protection (against human rights violations)," the court said and asked the ASG to take instruction from the government on the issue.

The court, however, made it clear that the report of the inquiry, if conducted, would not be used for any other proceeding and would be submitted before the NHRC which would decide on further course of action on the basis of finding.

"Take instruction from the government. The inquiry is only a fact-finding exercise and its report would not be used by any other body. NHRC will look into the report and would decide what is to be done," the court said while adjourning the matter for May 4.

At the beginning of the proceedings, the government and the National Human Rights Commission were at loggerheads as the ASG contended that the Commission can't force the government to hold a magisterial inquiry in the case.

"NHRC should not think that its guidelines are mandatory and if it is not satisfied with the probe conducted by Delhi Police then it should go ahead with its own inquiry but it cannot direct us to hold a magisterial inquiry," Subramanium said.

The Commission, on the other hand, submitted it required a report of a magisterial inquiry to proceed further as it was not possible to conduct the probe all over the country in all such cases in which people get killed in police action.

"Inquiry conducted by the crime branch is not a substitute for a magisterial probe. Speculation is going on for the last many months pertaining to this case. We are asking for transparency and accountability," advocate Shobha, appearing for NHRC, said adding a magisterial inquiry would not have demoralising impact on the police force, as argued by the government earlier.

Countering the arguments, the ASG said "the Commission must do what is supposed to do on its own. What it has to do cannot be done by an executive magistrate. If the commission is short of people it should go to Parliament".

Earlier, the NHRC had told the court that a magisterial probe into the encounter is a "must" and the government should not shy away from it arguing mere holding of the inquiry does not mean the encounter is fake.

Earlier, Delhi's Lieutenant Governor had refused to allow a magisterial inquiry into the encounter on the ground that it would demoralise the police force. "If every bullet fired is going to invite a magisterial inquiry or murder case, the officers will avoid carrying weapons and a young man in the country will avoid joining police. If this message goes around in the criminals, total chaos is not far away," the police had said.

The court was hearing a PIL filed by an NGO Act Now For Harmony and Democracy seeking a judicial inquiry into the September 19, 2008, encounter in which two suspected terrorists, allegedly involved in the Delhi serial blasts, and police inspector Mohan Chand Sharma were killed.

The incident took place a week after serial blasts rocked the national capital killing 26 people and injuring 13 others.

Raising doubts over the police version of the incident, advocate Prashant Bhushan, appearing for the petitioner, said "four separate inquiries were conducted by independent non-government organisations and all of them have raised doubts on the police version in the case."