By local legend the town was partly settled by Bengali textile workers fleeing British persecution in the 1830s. According to this legend, the East India Company had mutilated the skilled workers by chopping off their thumbs, making them unable to work. However, there is no historical evidence for this event, and most academic historians believe it to be a myth that arose, either by adaptation from the story of Ekalavya in the Mahābhārata, or from a mistaken quotation from a contemporary British source reporting possible self-mutilation by Bengali workers to break their indenture. One motive was to eliminate Bengali textile production, in favour of British factory-produced imports monopoly, increasing the profits of East India company in the 1830s. This is exactly what happened after the failed Rebellion of 1857. Cotton farmed by Indians was exported to Britain at a low price, and British textiles were imported and sold to Indians at a high price. In March–April during the Indian Rebellion of 1857, the inhabitants of Mahua Dabar intercepted a boat carrying six British soldiers. These soldiers were surrounded and killed by the people of Mahua Dabar. On 20 June 1857 the British 12th Irregular Horse Cavalry surrounded the town, slaughtered all the inhabitants and set the houses on fire. The town was razed to the ground and only farming was allowed. The tilling of the land destroyed all ruins of the destroyed town. Mahua Dabar, a town of 5,000 persons, completely disappeared from history and geography. In 1994, Mohammad Abdul Latif Ansari, the great-grandson of one of the survivors that managed to escape Mahua Dabar before the British encirclement of the town started researching the location of his ancestral destroyed town. The-then Basti district magistrate, R.N. Tripathi created a committee of historians from the University of Lucknow; and they found an 1831 map after 13 years of research which showed the location of the Mahua Dabar town. All the maps after 1857 showed the area as farmland. On 3 July 2011, Jagdambika Pal and other members of Lok Sabha, lower house of the Parliament of India, opened Commemorative plaque at Mahua Dabar.
