Established at Amritsar on 11 April 1883 to oversee and provide direction to the work of the Singh Sabha. This reform movement had originated in Amritsar with the formation of the first Singh Sabha on I October 1873. Singh Sabhas began springing up in other places, the one at Lahore being formed on 2 November 1879. Amritsar and Lahore Singh Sabhas joined hands to evolve a common platform under the name of General Sabha set up at Amritsar on 11 April 1880.

The General Sabha turned itself on 11 April 1883 into the Khalsa Diwan, the central body to which thirty-six Singh Sabhas were initially affiliated. The Lieutenant- Governor of the Punjab and Raja Bikram Singh of Faridkot were its patrons with Baba Khem Singh Bedi as president and Bhai Gurmukh Singh as chief secretary. The Diwan addressed itself to the tasks of religious and social reform and the promotion of education. It was the first representative organization of the Sikhs and at the time of the visit to Amritsar of the Governor-General, Lord Dufferin, it presented to him on 11 April 1885 an address stressing mainly the educational backwardness of the community and seeking the means to redress it. But the Diwan suffered a setback as a schism occurred between the Amritsar and Lahore Singh Sabhas.

The Lahore group was especially critical of the way Baba Khem Singh Bedi, being a direct lineal descendant of Guru Nanak, was apotheosized by his followers and how he sat in the sangat on a special seat, gadaila or cushion even in the presence of the Guru Granth Sahib for which reason the Amritsar group was pejoratively called the Gadaila Party. Opinion was sharply divided at the annual meeting of the Khalsa Diwan in April 1884 when the Rawalpindi Singh Sabha under the influence of Baba Khem Singh proposed that the name of the Singh Sabha be changed to Sikh Singh Sabha to enable non-baptized Sikhs to enroll as members.
This was strongly opposed by the Lahore spokesman, Bhai Gurmukh Singh, and the meeting broke up in confusion.

The publication in May 1885 of a book in Urdu entitled Khurshid Khalsa, written by Bava Nihal Singh, caused further antagonism between the two groups. The book contained passages against the government and in favour of Maharaja Duleep Singh who had by that time turned a rebel. To this the Lahore party objected and asked the author to withdraw the book. Gurmukh Singh as secretary of the Khalsa Diwan issued a letter in October 1885, clearing the Diwan of any connection with the publication and throwing the entire blame on the author, who had the backing of the Amritsar faction. As the differences came to a head, the Lahore group split from the parent body and set up on 11 April 1886 a separate organization called the Khalsa Diwan Lahore.

The truncated Amritsar Diwan was left with fewer than 10 Singh Sabhas affiliated to it - three important ones among them being those of Amritsar, Rawalpindi and Faridkot. A new constitution of the Diwan adopted in September 1887 failed to stem the decline; it in fact accelerated the process. Under the new scheme the Diwan split itself into two divisions - the upper house called Mahan Khand representing the aristocracy and the lower house Saman Khand representing the common people. Baba Khem Singh was president of the former and Man Singh, manager of Sri Darbar Sahib, Amritsar, of the latter, with Raja Bikram Singh as patron at the apex. The Diwan became defunct with the establishment of the Chief Khalsa Diwan in 1902.

Source: Encyclopaedia of Sikhism, Harbans Singh