Between 1764 and 1772, Marathas led by its Prime Minister Madhavrao Peshwa had defeated Hyder Ali, ruler of Mysore, in three successive battles. In all these battles, leader in action on battle front was Murarrao Ghorpade of Gooty who was bestowed upon title of Senapati by Peshwa. Hyder Ali was looking out for an opportunity to take the revenge and avenge his defeat. Between 1775 and 1782, Maratha forces were engaged in the First Anglo-Maratha War. Hyder Ali seized this opportunity and besieged Gooty in 1776. Murarrao fought for four months but realising that Marathas can not come to his rescue, surrendered the fort to Hyder Ali. Murarrao was imprisoned along with his wife and died as prisoner in 1779. Hyder Ali seized and annexed other Ghorpade territories like Dattawad, Gajendragad and appointed Fateh Ali Khan as governor of province comprising Karnal (Nizam's territory), Gadag, Dharwad and Bellary (held by Marathas). Once war with East India Co was over, Maratha guardian Minister Nana Phadnavis decided to take back areas occupied by Hyder Ali's son Tipu Sultan. Since the Scindias were busy in their war against Rohillas, Tukoji Rao Holkar, Maharaja of Indore, was asked to lead the battlefront against Tipu Sultan to be assisted by Peshwas Lieutenant General Haripant Phadke and Malojiraje Ghorpade of Mudhol. Nizam Ali, Asifjah of Hyderabad also joined Marathas and they raided Gajendragarh in June 1786. Tipu's forces could not withstand artillery attack led by Ganesh Vyankaji. His berad infantry was trounced by Maratha cavalry led by Haripant & Malojiraje. Ultimately Tipu offered truce and a treaty was signed in April 1787. As a part of treaty, Gajendragad with 14 villages was handed over to Daulatrao, younger brother of Murarrao Ghorpade & half the talluq was handed over to Nizam.
Here onwards, Marathas joined by HEIC forces & Nizam fought with Tipu till 1792 & freed Sandur,Dattawad & handed over Gooty to Nizam.
Following the Maratha victory, Tipu Sultan of Mysore was obligated to pay 4.8 million rupees as a war cost to the Marathas, and an annual tribute of 1.2 million rupees. In addition to returning all the territory captured by Hyder Ali.