The Nakhas, long soaked with the blood of martyrs, became for the Sikhs a sacred spot and, after they came into power in Punjab during the 1760's, they established a gurdwara there which they named Shahidganj. Since then it had remained in the possession of the Sikhs as a sacred place. Soon after the annexation of the Punjab to the British empire, one Nur Muhammad filed a case in 1850 for the reversion of the mosque to him as its rightful owner, but it was turned down as the court was not convinced of the genuineness of the claim. Similar claims raised in 1854 and 1883 were also dismissed on the ground that the place was no longer a mosque but a gurdwara. According to the Punjab Government Gazette Notification No 275, dated 22 December 1927, the shrine was listed as Gurdwara Shahidganj Bhai Taru Singh. The Muslims again contested the Sikhs' claim to their mosque but the Sikh Gurdwara Tribunal, established under the Sikh Gurdwaras Act, 1925, in its judgement dated 20 January 1930 determined that the place was the property of Gurdwara Bhai Taru Singh.
The Muslims went in appeal, but the Lahore High Court in 1934 upheld the verdict of the Gurdwara Tribunal. The local Gurdwara Parbandhak Committee, Lahore, got possession of the Shahidganj in March 1935 and decided to replace the old mosque-like building with a new one. The bulk of the clearing work having been completed by 7 June 1935, the demolition of the old building was taken in hand on 8 June. It continued uninterrupted for 20 days, but on 29 June a Muslim mob tried to enter the premises and, although they were successfully checked by the inmates, the Deputy Commissioner of Lahore, Mr S. Pratab, stayed further demolition. The political climate in the country was already charged with communal passions aroused by the Communal Award of 1932. The Sikhs, considering that, after the decision of the courts in their favour, the reconstruction of the Gurdwara was their natural and legal right, resumed the demolition on 8 July despite the stay order. This was resented by the Muslims, but the government did not use force to prevent the demolition, for the reason that the Sikhs in taking this action were not committing any criminal offence. In fact Sikh leaders had asked many Akalis to leave the city and sent out instructions to different centres not to send any more volunteers to Lahore. The tension did mount, but Lahore remained free from any communal incidents. On 2 December the government passed a general restrictive order under Arms Act, 1878, banning the carrying of swords and kirpan. The Sikhs resented the restriction on kirpan which was, one of their religious symbols, and launched an agitation against the ban on 1 January 1936. The ban was withdrawn on 31 January 1936.
Meanwhile, the Muslims had filed, on 30 October 1935, a fresh suit for the possession of the Shahidganj Mosque. Though the suit was dismissed on 25 May 1936, an appeal was filed in the High Court. The Shahidganj issue temporarily receded into the background partly owing to the impending elections to the Punjab Legislative Assembly under the Government of India Act, 1935. In April 1937 the Unionist party representing sections of Muslims, Hindus and Sikhs formed the ministry under Sir Sikandar Hayat Khan, who claiming his ministry to be neutral in character, made it clear to the Muslims that their claim in the Shahidganj case could not be accepted arbitrarily. He promised to strive for an amicable settlement of the problem and appealed to the parties to the dispute not to do anything which might worsen the communal situation in the Punjab. The Shiromani Gurdwara Parbandhak Committee, an elected body representing the Sikh people, unanimously passed a resolution at its meeting held on 10-11 March 1938 affirming that no compromise was possible on what it considered a vital religious issue. Meanwhile, the legal battle continued. The Muslims' appeal filed in the High Court was dismissed on 26 January 1938, and a further appeal to the judicial Committee of the Privy Council met with the same fate on 2 May 1940. This virtually ended the dispute.
:Encyclopaedia of Sikhism - Harbans Singh