The town of Gursarai was founded with a grant of land given to the chief of the Peshwas of Malwa for his service during the Second Battle of Panipat. Mukundraj supposedly won the battle for the Peshwas by poisoning the food of a Mughal General when the latter visited the Peshwa court. This act led to the withdrawal of Mughal armies from the borders of the Malwa Empire.