Sahu, Sambhaji’s son, who had spent eighteen years in the Mughal camp, was released by Azam in the hope that a rift would thus be created in the Maratha camp. Sahu was granted the right to levy sardeshmukhi and chauth over six subas of Deccan viz. Khandesh, Berar, Aurangabad, Bidar, Hyderabad and Bijapur.

Tara Bai opposed him with the help of many Maratha sardars who did not like that their king should rule as a feudatory of Delhi Emperor. But Sahu was also able to win over the sympathy of the other group of Maratha leaders who felt proud of his father Sambhaji’s martyrdom.

They also disliked the weakminded Shivaji, son of Rajaram. Included among them were Balaji Vishwanath, Sarsubah of Poona and Daulatabad who was to play an important role in the Maratha history. With the help of these leaders, Sahu defeated Tara Bai at Khed in 1707 and took over the reins of the Government with Satara as his capital.

Tara Bai took refuge at Panhala. His son Shivaji whom she had placed on the throne also died in 1712, and the administration was taken over by Rajas Bai, second wife of Rajaram. Sahu permitted her to rule independently through the intercession of Balaji Vishwanath whom he had appointed as Peshwa.

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Balaji Vishwanath, a Chitpavan Brahman, raised from the position of a scribe under Ramchandra Pant Amatya a revenue collector of Dhanaji Jadhav, to the highest office of the Peshwa in 1713. This office became hereditary and was held by his descendents till 1818.

The internal quarrels of the Mughals gave an opportunity to the Maratha to increase their power. Syed Husain Ali who had taken over as governor in place of Nizam-ul-Malik approached Marathas for help. They agreed to his proposal on the following conditions viz. all the territories held by Marathas in the time of Shivaji should be restored to them.

The territories conquered by them in Berar, Karnataka, Gondwana and Hyderabad would be retained by them. The Marathas would further collect the chauth and sardeshmukhi from the Mughal provinces in the south.

On their part, the Marathas agreed to provide the Mughal emperor with a contingent of 15000 horses besides paying a tribute of Rs. 10 lakhs annually. Balaji Vishwanath along with his son Baji Rao paid a visit to Delhi. He was able to secure most favourable terms from the king-maker Husain Ali Khan who was anxious to ensure Maratha help in the internal struggle for power.

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According to the terms of treaty, Marathas were given the right to levy chauth and sardeshmukhi as well as the rights of autonomy. Yesu Bai, mother of Sahu, was also released. This treaty has been rightly regarded as “a landmark in the Maratha history.” Sardesai calls it the “Magna Carta of the Maratha Dominions.”

The Marathas became partners along with the Mughals in the revenue of the Imperial provinces. Balaji Vishwanath saw the tottering condition of the Mughal Empire with his own eyes and confidently hoped to build one day a Maratha empire on its ruins. His visit to Delhi brought him into contact with the Rajputs with whom he forged friendly relations.

The revival of the jagir system which began in the days of Rajaram reached its culmination in the time of Balaji Vishwanath when separate areas were assigned to the Maratha sardars for collection of chauth and sardesmukhi. It led to carving out of semi-independent states in the days of the latter Peshwas.

It may, however, be stated to his credit that this policy stopped the internal feuds among the Maratha chiefs and diverted their attention to more fruitful ventures of extending their principalities. He encouraged agriculture, promoted trade and commerce and tried to increase the revenue of his infant state by various judicious measures.