Yahiya Khan, the eldest son of Nawab Zakariya Khan, became governor of Lahore under the Mughals in 1745 after the death of his father. He continued his father's policy of repression against the Sikhs. During his regime, a fracas between a band of Sikh horsemen and the State constabulary resulted in the death of Jaspat Rai, Faujdar of Eminabad and younger brother of Diwan Lakhpat Rai, who was revenue minister to the governor. The minister, bent upon vengeance, took heavy reprisals, rounding up Sikhs living in Lahore and having them executed at the nakhas, the local horse market, later renamed by Sikhs Shahidgahi (martyrs shrine). Lakhpat Rai and Yahiya Khan proceeded in pursuit of Sikhs concentrating on the bank of the Ravi, north of Lahore. The Sikhs retreated further northwards but the hill soldiers coming from the opposite side barred their way. Yahiya Khan's troops caught up with the Sikhs at Kahnuvan in Gurdaspur district on 1 May 1746 and inflicted upon them a heavy defeat, with more than 7,000 of them killed in battle and 3,000 taken to Lahore as captives to be executed there. The disaster which overtook the Sikhs is known in history as Chhota Ghallughara or Minor Massacre in contrast to Wadda Ghalughara, the Great Massacre, that took place later on 5 February 1762.
Shah Nawaz Khan, brother of Yahiya Khan and governor of Multan, revolted against the authority of Yahiya Khan and hostilities between the two brothers continued through the winter months of 1746-47. In March 1747 Shah Nawaz forced his way into Lahore, put Yahiya Khan in jail, and proclaimed himself governor of the Punjab.