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The city of Kotli dates back to the twelfth century, when it was settled by a branch of the Royal Mangral family of Kashmir, descendants of Raja Mangar Pal. Originally known as Kohtali, literally meaning "under mountain" due to the surrounding landscape. Kotli remained as a semi-auntonomous state until it was finally subdued by Ranjit Singh in 1819 and incorporated into the Sikh Empire.
After the independence of Pakistan and India from the British rule, "bands of deserters from the State Army, some serving soldiers of the Pakistan Army on leave, ex-servicemen, and other volunteers who had risen spontaneously" reached Kotli in November 1947. They expelled the Dogra garrison at the town. India then sent its armed forces to Kashmir where they attacked Kotli in an attempt to recapture it. The Pakistan Army counter-attacked with the aid of the native tribesmen, winning a decisive victory in the Battle of Kotli. It has been under Pakistani control ever since.
Ẓahīr, Ḥasan; Zaheer, Hasan (1998). The times and trial of the Rawalpindi conspiracy 1951: the first coup attempt in Pakistan. Karachi Oxford: Oxford University Press. ISBN978-0-19-577892-2.