India's Supreme Court has asked the army to decide whether officers accused of "staged killings" in Indian-administered Kashmir should be tried by an army court or a civilian court.
The court said if the army did not want a court martial for the officers, they could be tried in civilian courts.
The army has opposed a civilian trial for the officers, saying police need permission from the government.
But prosecutors say no such sanction is required.
The officers are accused of killing seven people in Pathribal village in 2000.
The army said the victims were foreign militants who had carried out a massacre of 35 Sikhs in Chittisinghpora village a month earlier.
Police later exhumed their bodies and said forensic tests confirmed suspicions that the bodies were those of local residents who had gone missing two weeks before.
On Tuesday, Supreme Court Justices BS Chauhan and Swatanter Kumar said that if the military authorities did not want to launch a court martial, then the Central Bureau of Investigation (CBI) could seek sanction from the central government to prosecute the officers, the Press Trust of India news agency reported.
The judges said if the trial was to be held in civilian criminal courts, the government should give its sanction within three months.
Earlier, the CBI told the court that the army officers involved in the alleged killings - known as "a fake encounter" - had no immunity from prosecution.
"Our investigations have revealed it was a fake encounter and cold-blooded murders. If public confidence in the rule of law and dispensation of justice is to be sustained, the accused officers deserve to be meted out exemplary punishment," CBI lawyer Ashok Bhan told the court.
The CBI also argued that no prior sanction was required for prosecution because the accused officers did not kill the civilians in the course of their duty.