Nawal Kishore Yadav, 35, a resident of Sisbani, was killed in the encounter.
Armed Police Force Superintendent Shanti Ram Thapa said Yadav was shot at in retaliation after an unidentified group opened fire at police patrol.
Yadav´s identity was revealed from a diary that he was carrying.
Police are unsure whether Yadav was associated with any criminal group.
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