The bodies were found half buried in a mud pit in a maize field at Malnar Wudar with their eyes blindfolded and hands and legs tied with ropes. The duo were killed in cold blood by slitting open their throats, Deputy Inspector General of Police, South Kashmir, Ravinder Kotwal said.
The militants of Lashkar-e-Toiba were suspected to be behind the double murder after their ransom demand for Rs 50 lakh was not met.
Police officials said the inspection of the spot indicated that the execution was carried out only this morning as the blood stains were still fresh.
Kotwal said the bodies of the engineer and his brother Sandeep were identified by Pundir's colleagues. Some personal belongings of the engineer including a briefcase were also recovered from the site.
The Indian Railway Construction engineer was overseeing work on the prestigious project aimed at connecting Kashmir with Jammu by rail.
Pundir and his brother alongwith two locals were kidnapped by gunmen on Wedenesday from Awantipora area of the district.
However, a local contractor Farooq Ahmad Kuchay and driver Shabir Ahmad were let off unconditionally by the kidnappers.
The vehicle used in the kidnapping of the four persons was found abandoned at Chilipora-Achan in the same area.
No militant outfit has claimed responsibility for the abduction of the railway official and his brother.
Pundir was kidnapped by some gunmen from the site of railway construction at Gulzar Takna in Awantipora, 30 kms from here on Wednesday.
A resident of UP, Pundir was overseeing work at the site of the construction on Qazigund to Baramulla link when he was forced by gunmen into the Tata Sumo hired by IRCON along with the driver of the vehicle Shabir Ahmad and Kuchay.
Pundir's brother, who had come to visit him, was also abducted by the gunmen.
The kidnapping came to light when the abductors rang up the office of manager, civil, IRCON, Mohammad Sheikh at Tulsibagh here demanding a ransom of Rs 50 lakh for release of the hostages.
The killings were the first such incident involving outsiders in nearly a decade.
In July 1995, Al-Faran militant outfit kidnapped six foreign tourists from the foothills of Pahalgam. While an American escaped from the clutches of the captors, a Norwegian was beheaded by the abductors.
The fate of remaining four was not known.