Maratha King Shahu had appointed Balaji Vishwanath as his Peshwa or Prime Minister in 1713.

Balaji had managed within the ensuing decade, to extract a significant amount of territory and wealth from the fragmenting Mughal Empire.

Baji Rao, the son of the first Bhat family Peshwa, Balaji Vishwanath, was at the age of twenty ppointed by Chhattrapati Shahu as Peshwa upon the death of his father, setting aside all other claimants.

The Mughal Emperor Muhammad Shah in October 1724 had appointed Nizam-ul-Mulk as the Governor of Deccan.

The Nizam had set about strengthening the province by attempting to control the growing influence of the Marathas.

He has utilized a growing polarization in the Maratha Empire due to the claim of the title of King by both Shahu and Sambhaji II of Kolhapur.

The Nizam has begun supporting the Sambhaji faction, thus enraging Shahu, who has been proclaimed as King.

The Nizam further decides to halt the payment of the chauth, twenty-five percent of the revenue being given by many landowners of the Deccan province to the Marathas, as had been agreed by the Sayyid brothers in 1719.

The withdrawal of Baji Rao’s army from the southern reaches of the Maratha empire during May 1727 is followed by Shahu’s breaking off negotiations with the Nizam-ul-Mulk concerning restoration of the chauth.

The Nizam pursues Baji Rao's army around the vicinity of Pune for about six months, where Baji Rao executes a series of thrust and parry moves to finally corner the Nizam at Palkhed.

Defeated, the NIzam signs a peace treaty on March 6, 1728, at the village of Mungi-Paithan.

By the treaty of Munji Shivagaon, the Nizam is forced to recognize Chhatrapati Shahu as the only Maratha ruler, and to recognize Maratha authority to collect from the Deccan chauth and sardeshmukhi—an additional ten per cent levy on top of the chauth, a tribute paid to the king—of the Deccan.

Those revenue collectors driven out are to be reappointed, and the balance of the revenue owed is to be paid to Chhatrapati Shahu.