Panchayat is the epicenter of local Politiology that serves as a traditional and indigenous system of conflict resolution at the village level in Pakistan. Khula (divorce) is one of the social issues that are mostly handled by the panchayat besides the presence of a legal system: both institutions stay anonymous to each other. The study is conducted in Mandi Baha Uddin to understand the significance of Panchayat as a local level trusted institution meant for arbitration using qualitative approach. The methodology of the study was descriptive where case study and in-depth interview methods were used. The study findings endorse that Panchayat is an indigenous powerful political institution that can adjoin with the development sector in providing justice about agriculture, forestry, and welfare projects. It can serve more efficiently with the support from the legal justice system. Execution of decisions by the traditional justice system can only be effective once streamlined for better and owned decisions at the community level politics.