This simple yet imposing building, was built in 1445 as a victory monument. Chronicler Mohammad Kasim ‘Farishta’ in his Tarikh-e-Farishta mentions that the palace was built by the Sultan of Malwa, Mehmood Shah Khilji, to commemorate his victory over Sultan Mehmood Sharki in the battle at Kalpi.
The building is square in plan and at the centre of each of the four sides of the first storey are tall, arched doorways. Initially planned as a seven-storeyed structure, as suggested by its original name, Kushk-e-Haft Manzil or ‘the edifice with seven-storeys’, at present it shows only three complete storeys and a part of the fourth. There is no consensus on whether the intended seven storeys were ever completed. Some claim that the upper storeys have collapsed with time, while others believe that the project was never finished. One legend has it that the real reason the Sultan ordered the monument’s construction was to provide employment to the people of Chanderi. At that time, the people of the town were facing a severe shortage of work and using the pretext of the victory at Kalpi, the project was initiated to provide the people with work and pay.
It is suggested that once the first storey was completed, the builders were faced with the problem of raising the heavy stone blocks to the second level. This was resolved by burying the first storey under dirt to create a slope on which the blocks could be carried uphill. Each storey was similarly constructed and finally the dirt was cleared away to uncover the entire structure.
The stone used in the construction of the palace was quarried from near Fatehabad and the Chhiyoli River. The removal of these boulders resulted in the creation of two large water bodies, which are now known as Mallukha and Sultania ponds.