The gangsters were identified as Kamaljit Singh alias Bunty Dhillon, Jaspeet Singh alias Jumpy and Nishan Singh.
While Dhillon and Jumpy - both category A gangsters - died on the spot, Nishan died on his way to the hospital.
Acting on a tip-off, Punjab's Faridkot police along with its counterparts in Haryana surrounded a house in a village near Dabwali town in Sirsa district early in the morning and asked them to surrender.
In retaliation, the gangsters fired at the police and there was crossfire.
Superintendent of Police Satinder Gupta told reporters the gangsters committed suicide after being cornered by police.
Police found Dhillon and Jumpy dead with bullet injuries in their heads while Nishan was alive with bullet injuries.
Police recovered five weapons from the encounter spot.
Gonder had escaped from Punjab's high security Nabha jail in November last year.