Village Panchayats are the pillars of democratic decentralisation and rural governance in India. Although a lot of research has focused on the Panchayati Raj Institutions at the national and state levels, very few have investigated the historical development and developmental trajectory of a particular Panchayat. This research explores the story of Khani Kote Panchayat, its origin and growth, with historical, political, socio-economic and cultural backgrounds, in Reasi district of Jammu and Kashmir. The study uses secondary data sources such as government publications, district gazetteers, census reports, and local records and documents available in the area to analyze the historical evolution, institutional development, governance, demographic profile, socio-economic changes, and cultural heritage of Panchayat. The study recommends that Khani Kote Panchayat is an important instance of rural democratic governance in the Duggar region which has undergone a gradual evolution of traditional community institutions in the ambit of constitutional decentralization. It also underscores the contribution of Panchayati Raj Institutions towards local development, participative governance, community welfare, and points out the challenges that remain to be addressed for sustainable development and rural administration. The paper is a contribution to the scarce academic literature on village level governance in Jammu and Kashmir and highlights the significance of recording the local history to improve democratic decentralisation and rural development.