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Jasvant Rao was the third son of Tukoji Rao. Tukoji appointed his eldest son Kashi Rao as his successor and head of Holkar state. Tukoji's second son Malhar Rao rebelled against his father's decision, and Jaswant joined his ranks. The rebels plundered Malwa and Khandesh, leading Kashi Rao to call in the army of [[Daulat Rao Sindhia|Daulat Rao Sindia]]. Sindia's army led a surprise attack on the rebel camp, leading to the death of Malhar and Jaswant was wounded and fled.<ref>{{Cite book |last=Sarkar |first=Jadunath |title=Fall of the Mughal Empire |publisher=M.C. Sarkar & Sons |year=1950 |volume=IV: 1789-1803 |pages=138–140}}</ref>
 
Jaswant Rao took protection under [[NagpurRaghoji kingdom|Raghuji BhonsleI of Nagpur|Raghuji I]], a friend of his father Tukoji. One his way to Nagpur, he met Bhawani Shankar who became a loyal servant. Once Daulat Rao became aware of Jaswant Rao's presence in Nagpur, he sent a letter to Raghuji telling him to arrest Jaswant as a rebel. Bhawani Shankar helped engineer Jaswant's escape from Napur.{{Sfn|Sarkar|1950|p=165-168}}
 
Jaswant Rao, who was plundering the nearby countryside, initially claimed he was only attacking Kashi Rao's villages in order to be granted a jagir as was his birthright. Kashi Rao himself was an unpopular ruler, and was despised by servants of the Holkar throne for being subservient to Daulat Rao Sindia. Jaswant then began claiming to represent the interests of his infant nephew Khande Rao II (son of Malhar Rao), and asked the [[Peshwa]] to recognize Khande Rao as the head of the Holkars and Jaswant Rao as his regent. Jaswant's campaigns of plunder attracted jungle robbers, Grasias, [[Pindari|Pindharis]], and Afghans (notably Mir Khan). In Khandesh, Jaswant received many allies. He was hired by Anand Rao Pawar, Raja of Dhar, but upon his employer's failure of payment he looted the state. At this point he had raised an army of 2000 cavalry and 5000 infantry. {{Sfn|Sarkar|1950|p=165-169}}