The Nizam of Hyderabad, which had previously obtained a three-month extension to agree on new agreements with the Dominion of India, wrote to the Indian government on 18 September that it was ready to enter into an association agreement with India. But he said membership would cause unrest and bloodshed in the state.  On 11 October, Hyderabad sent a delegation to Delhi with a draft status quo agreement, described as „complex” by V. P. Menon, Secretary of the Ministry of Foreign Affairs. Minister of State Vallabhbhai Patel rejected any agreement that would not fully cede defence and foreign affairs matters to the Indian government. On the advice of Governor General Louis Mountbatten, Menon prepared a new draft treaty that was referred with the Hyderabad delegation. The Nizam Executive Council reviewed the agreement and approved it by six votes to three. Nizam agreed, but delayed the signing of the agreement.  Both draft treaties were submitted to the House of Princes on July 25. A state negotiating committee was formed, which reviewed the two agreements, consisting of ten leaders and twelve ministers.
After discussion, the Committee finalized the two draft agreements on 31 July.  Some indigenous leaders of the Principality tried to buy time by declaring that they would sign the status quo agreement, but not the accession instrument until they had time to make up their minds. In response, the Indian government considered that it would only sign status quo agreements with the states that joined the Union.  Until August 15, 1947, the agreed date and date of India`s independence, all but four princely states, which are Indian, signed about 560 of them, both the accession instrument and the status quo agreement with India. The exceptions were Hyderabad, a large state in central South India, which received a two-month extension, and three small states of Gujarat: Junagadh and its subsidiaries (Mangrol and Babariawad).  Soon, under pressure from Majlis-e-Ittehadul Muslimeen (Ittehad), the Muslim nationalist party active in the state, Nizam withdrew from the agreement.  On the morning of 27 October, Qasim Rizvi, the leader of Ittehad, organized a massive demonstration by several thousand activists to block the delegation`s withdrawal.