The army was expanding rapidly in the aftermath of Ranjit Singh's death, from 29,000 (with 192 guns) in 1839 to over 80,000 in 1845 as landlords and their retainers took up arms. It now proclaimed itself to be the Khalsa, or embodiment of the Sikh nation. Its regimental panchayats (committees) formed an alternate power source within the kingdom, declaring that Guru Gobind Singh's ideal of the Sikh commonwealth had been revived, with the Sarbatt Khalsa or the Sikh as a whole assuming all executive, military and civil authority in the State, which British observers decried as a "dangerous military democracy". British representatives and visitors in the Punjab described the regiments as preserving "puritanical" order internally, but also as being in a perpetual state of mutiny or rebellion against the central Darbar (Court). In one notorious instance of unrest, Sikh soldiers ran riot, looking for anyone who looked as if they could speak Persian (the language used by the clerks who administered the Khalsa's finances) and putting them to the sword.
Maharajah Sher Singh was unable to meet the pay demands of the Khalsa, although he reportedly lavished funds on a degenerate court. In September 1843 he was murdered by his cousin, an officer of the Khalsa, Ajit Singh Sindhanwalia. The Dogras took their revenge on those responsible, and Jind Kaur, Ranjit Singh's youngest widow, became Regent for her infant son Duleep Singh. After the Vizier Hira Singh was killed attempting to flee the capital with loot from the Royal Treasury (Toshkana), by troops under Sham Singh Attariwala, Jind Kaur's brother Jawahir Singh became Vizier in December 1844. He apparently spent his term of office in a state of terror, trying to bribe the Khalsa with promises of treasure which could not be met. At an army parade in September 1845, he was butchered to death in the presence of Jind Kaur and Duleep Singh.
The Khalsa nevertheless did not take over the kingdom at this point. Although Jind Kaur publicly vowed revenge against her brother's killers, she remained Regent. Lal Singh (reportedly the lover of Jind Kaur) became Vizier, and Tej Singh became commander of the army. Sikh historians have stressed that both these men were prominent in the Dogra faction. Originally high-caste Hindus from outside the Punjab, both had converted to Sikhism in 1818 (like the majority of the Sikhs in Punjab at that time).
The actions and attitudes of the British, under Governor-Generals Lord Ellenborough and his successor, Sir Henry Hardinge, are disputed. By most British accounts, the main concern was that the Khalsa, now without strong leadership to restrain them, was a serious threat to British territories along the border. It was well known that the Khalsa had been asking Ranjit Singh for an opportunity to engage the British Army ever since their expansion had reached the borders of the Punjab. Sikh and Indian historians have countered that the military preparations made by these Governor-Generals were offensive in nature; for example, they prepared bridging trains and siege gun batteries, which would be unlikely to be required in a purely defensive operation..
The British attitudes were affected by reports from their new Political Agent in the frontier districts, Major George Broadfoot, who stressed the disorder in the Punjab and recounted every tale of corrupt behaviour at the court. For some British officials, there was a strong desire to expand British influence and control into the Punjab, as it was the only remaining formidable force that could threaten the British hold in India and the last remaining independent kingdom not under British influence. The kingdom was also renowned for being the wealthiest, the Koh-i-noor being but one of its many treasures. Despite this, it is unlikely that the British East India Company would have deliberately attempted to annex the Punjab had the war not occurred, as they simply did not have the manpower or resources to keep a hold on the territories (as proven by the outbreak of the Second Anglo-Sikh War).
Nevertheless, the unconcealed and seemingly aggressive British military build-up at the borders had the effect of increasing tension within the Punjab and the Khalsa. It is also equally well known that the British had been interfering in the intrigues at the Court or Lahore.
In response to the British move, the Sikh army began crossing the Sutlej on December 11, 1845. Although the leaders and principal units of the army were Sikhs, there were also Punjabi, Pakhtun and Kashmiri infantry units. The artillery consisted mainly of units of heavy guns, which had been organised and trained by European mercenaries.
The Sikhs claimed they were only moving into Sikh possessions (specifically the village of Moran) on the east side of the river, but the move was regarded by the British as clearly hostile and they declared war. One Sikh army under Tej Singh advanced towards Ferozepur but made no effort to surround or attack the exposed British division there. Another force under Lal Singh clashed with Gough's and Hardinge's advancing forces at the Battle of Mudki on December 18. The British won an untidy encounter battle.
On the next day, the British came in sight of the large Sikh entrenchment at Ferozeshah. Gough wished to attack at once, but Hardinge used his position as Governor General to overrule him and order him to wait for the division from Ferozepur. When they appeared late on December 21, Gough attacked in the few hours of daylight left. The well served Sikh artillery caused heavy casualties among the British, and their infantry fought desperately. On the other hand, the elite of the Sikh army, the irregular cavalry or ghodachadas (alt. gorracharra, horse-mounted)s, were comparatively ineffective against Gough's infantry and cavalry as they had been kept from the battlefield by Lal Singh.
By nightfall, some of Gough's army had fought their way into the Sikh positions, but other units had been driven back in disorder. Hardinge expected a defeat on the following day and ordered the state papers at Mudki to be burned in this event. However, on the following morning, the British and Bengal Army units rallied and drove the Sikhs from the rest of their fortifications. Lal Singh had made no effort to rally or reorganise his army. At this point, Tej Singh's army appeared. Once again, Gough's exhausted army faced defeat and disaster, but Tej Singh inexplicably withdrew.
Operations temporarily halted, mainly because Gough's army was exhausted and required rest and reinforcements. The Sikhs were temporarily dismayed by their defeats and by their commanders' actions, but rallied when fresh units and leaders joined them, and Maharani Jind Kaur exhorted 500 selected officers to make renewed efforts.
When hostilities resumed, a Sikh detachment crossed the Sutlej near Aliwal, threatening Gough's lines of supply and communications. A division under Sir Harry Smith was sent to deal with them. Sikh cavalry attacked Smith continually on his march and captured his baggage, but at the Battle of Aliwal on January 28, 1846, Smith won a model victory, eliminating the Sikh bridgehead.
Gough's main army had now been reinforced, and rejoined by Smith's division, they attacked the main Sikh bridgehead at Sobraon on February 10. Tej Singh is said to have deserted the Sikh army early in the battle. Although the Sikh army resisted as stubbornly as at Ferozeshah, Gough's troops eventually broke into their position. The bridges behind the Sikhs broke under British artillery fire, or were ordered to be destroyed behind him by Tej Singh (ostensibly to prevent British pursuit). The Sikh army was trapped. None of them surrendered, and the British troops showed little mercy. This victory effectively broke the Sikh army.
Sikh historians have always maintained that, in order to retain their hold on power and maintain the figurehead rule of Duleep Singh, Lal Singh and Tej Singh embarked on the war with the deliberate intent of breaking their own army. In particular, Lal Singh was corresponding with a British political officer and betraying state and military secrets throughout the war. Lal Singh's and Tej Singh's desertion of their armies and refusal to attack when opportunity offered seem inexplicable otherwise.
Although the Khalsa was indeed weakened by the war, resentment at British interference in the government led to the Second Anglo-Sikh War within three years.