Upon the failure of his removal from the king's court, a Company force attacked the fort of Khurda and captured Rajaguru.

[6] Being an excellent scholar in Sanskrit like his grandfather Gadadhara Rajaguru and a great Tantra Sadhaka, he was appointed as the Chief Minister-cum-Rajaguru of Gajapati Dibyasingha Deva in the year 1780 at the age of 41.

In 1779, during the war between the Khurda King and Januji Bhonsala at Badamba Gada, Narasingha Rajaguru was killed who was handling the army.

In this precarious condition Jayi Rajaguru was appointed as the head of the administration and the chief of Army of Khurda and carried out his duties until his death.

Taking advantage of the weak administration during the battles, the attack of Maratha mercenaries called Bargis intensified on the people of Khurda.

However, the main trouble started in 1757 when the British won the Battle of Plassey and occupied the provinces of Bengal, Bihar and Medinapur in Odisha.

It was agreed that the British would pay one lakh Rupees (₹ 1, 00,000) towards compensation to the king and to return the four Praganas which were under the control of the Marathas since 1760 A.D.

Filled with rage Rajaguru rearranged his army and occupied the four Praganas on his own with an intention to drive the British out of his state, his country.

In his petition Mukunda Deva-II stated that he was innocent and blamed Rajaguru for instigating the Paiks and being responsible for the trouble caused to the British.