The shoot-out took place last night following a verbal duel between two groups over tender award for a canal work in the area, Inspector In-Charge of Biridi police station Amareswar Panda said.
While contractor Panchanan Rout (40) died on the spot, his nephew Samir Rout (25) and cousin Kishore Rout (30) sustained injuries, he said adding that Sukadeb Behera (35) of another group, also a contractor was also injured.
The injured were taken to SCB Medical college and hospital at Cuttack for treatment, Panda said.
There was a dispute between Sukadeba Behera and Panchanan Rout, both having criminal record, over a tender for a canal repair work from Irrigation department, police said.
As the incident triggered tension, security was tightened and additional force deployed in the area in order to prevent any major flare up, they said.