The draft status quo agreement was drawn up on 3 June 1947 by the political department of the British-Indian government. The agreement provided that all administrative agreements of “common interest” between the British Crown and a particular signatory state would be kept unchanged between the signatory regime (India or Pakistan) and the State until new agreements are concluded. A separate timetable set out issues of common interest. During the discussion, Jawaharlal Nehru, India`s future prime minister, expressed doubts about whether the agreement should cover only “administrative” issues. Mohammad Ali Jinnah, the future Governor General of Pakistan, spoke in his favour.  In other activities, a status quo agreement can be virtually any agreement between the parties, in which both parties agree to discontinue the case for a specified period of time. This may include an agreement to defer payments to help a company in difficult market conditions, agreements to stop the production of a product, agreements between governments or many other types of agreements. A status quo agreement between a lender and a borrower may also exist when the lender stops requiring a planned interest or capital payment for a loan to give the borrower time to restructure its debts. The agreement is particularly relevant because the bidder would have access to the confidential financial information of the entity concerned.
After receiving the commitment of the potential purchaser, the target entity has more time to set up additional defence facilities for the acquisition. In some situations, the target entity agrees to repurchase shares of the target with a premium in return for the potential purchaser. A company that is pressured by an aggressive bidder or activist investor believes that a status quo agreement is useful in weakening the unsolicited approach. The agreement gives the target entity greater control over the deal process by requiring the bidder or investor to buy or sell the company`s shares or launch proxy contests. Soon the Nizams found themselves under pressure from Majlis-e-Ittehadul Muslimeen (Ittehad), the Muslim nationalist party that was active in the state and 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.