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The Gram Panchayata system existed in India till the British rule came to India.
Except for major offenses such as murder, decoit etc., all other offenses are tried at the Gram Panchayat itself. Matrimonial disputes, loans, labour problems, land and caste disputes etc. were used to be solved by the Gram Panchayat. Issues are rarely referred to the King or the seat of administration of the justice in the state capital.
In general, the head of the village caste used to be the administrator of justice in the gram panchayat. Varnasrama dharma, dharma sastras and customs in the region are followed while administrating the justice. No regular or formal procedure is followed. The trail and awarding of the judgement are done on the same day. The parties of the dispute takes oath on the local Hindu God. The system is quick and speedy both in terms of trial and giving the judgement.
The Muslim rulers of India did not interfere much with the system. Even the Britishers too felt the system to be effective in a country like India. The Regulation VII of Madras Code, 1816 recognizes a Panchayat member as a judge. This can also be seen in Section 19(c) of the Indian Penal Code, 1860.
During the British Rule, the system was replaced by a three-tier village administration and local self governance system. The three-tiers - Village Unions, Taluk Boards and District Boards are established under the Local Boards Act, 1884. The Village Panchayat Act, 1920 even strengthened it. After Independence, the Madras Legislature passed the Madras Village Panchayats Act, 1950 that said that a Panchayat should be established for every village having 500 people and above.
Under the recommendations of the Balwantray Mehta Committee, the Andhra Pradesh State Government enacted the Andhra Pradesh Gram Panchayats Act, 1959 that dealt with the constitution, staffing, functions, finance and control of panchayats. Later, the Andhra Pradesh Panchayat Samithis and Zilla Parishads Act, 1959 and Andhra Pradesh Gram Panchayats Act, 1964 are enacted.
The Andhra Pradesh Panchayat Raj Act, 1994 is a major act in regard to the Panchayat system.