The shooting took place when local criminal Chinu Pandit was being greeted by his brother and supporters outside the prison gate on his release.
As he was speaking to them, unidentified assailants opened fire at them.
Two people were killed on the spot while the third died of his injuries in a hospital.
While Pandit survived the attack, his brother was killed. The other two were identified as his supporters.
The bodies have been sent for autopsy, while a manhunt has been launched to nab the attackers, an official told IANS.
Old rivalry between two gangs seems to have been the reason behind the attack, the official said.