According to the police, pedestrians noticed the unattended container and informed the police at about 10 am on Thursday morning, Jun 30.
The bomb disposal squad from Srinagar police control room immediately moved to the spot and defused the explosive, the police spokesman said.
The state-owned hotel Heemal houses a government-run wine shop and the police believe that the shop could have been the target. Police have started investigations, a senior police officer said.
The Dal Lake area these days is packed with tourists that led to frequent traffic snarls on the Boulevard road. The recovered explosive had the potential to cause extensive damage. The police is probing the matter, but no one yet has been arrested.