Brief History: When the British were leaving the Indian subcontinent there were 570 'princely states' in the subcontinent ruled by hereditary rulers. The British gave the rulers of these states the option of acceding to India, to Pakistan, or of remaining independent. The majority of these states acceded to India, a few to Pakistan. Indian independence arrived August 15th, 1947. Problems arose in a few states that had princes who were of a different religion than the majority of their subjects.

The Nawab of Jugandah and the Nizam of Hyderabad were Muslim rulers of states that were predominantly Hindu. Hyderabad and Jugandah were also physically in proximity to territory that was becoming India. When the nawab attempted to accede to Pakistan India imposed an economic blockade and later armed a "liberation army" of Hindu emigrees to invade. The nizam did not decide immediately, but signed a one year "standstill agreement" with India to have extra time to decide. In September 1948 the Indian army invaded and took over Hyderabad.
Unlike Hyderabad and Jugandah, Kashmir was ruled by Maharaja Hari Singh, a Hindu prince of a majority Muslim population. Kashmir also was located between India and Pakistan. The maharaja did not wish to make an immediate decision, perhaps hoping for independence. He signed a Standstill Agreement with India and Pakistan. There are two versions of what happened next:

Pakistan's version of events: The ruler of Kashmir, as a Muslim, wished to accede to Pakistan. He was placed under tremendous pressure by the Indian government to accede to India. The Muslim population, seeing this and the covert arrival of Indian troops, rose up and rebelled against Hari Singh. The government of India, alleging that the ruler had acceded to India on the basis of a fraudulent instrument of accession, invaded and occupied a large part of Kashmir, which is now divided into Azad (Liberated) Kashmir and 'Indian-held Kashmir'. India has reneged on its promise to hold a plebiscite to determine the wishes of the Kashmiris... India needs to implement UN resolutions calling for a referendum.

India's version of events: Pakistan implemented an economic blockade of Kashmir to force the maharaja to accede to Pakistan. When this failed Pakistan next sent armed Pathan tribesmen into Kashmir to forcibly annex it. Maharaja Hari Singh was thus obliged to seek India's assistance, and on October 26th 1947 Hari Singh signed the Instrument of Accession. Indian forces entered Kashmir and fighting continued until the battle stabilized. Eventually the United Nations arranged a cease-fire January 1st 1949 and the cease-fire line became known as the Line of Control. Approximately a quarter of the western portion of the state is occupied by Pakistan, with the remainder a part of India. A plebiscite has never been held as promised because Pakistan never fulfilled a prerequisite condition - the complete withdrawal of Pakistani troops from Kashmir. Subsequently, free and fair elections have been held in Kashmir. Lastly, the future of the disputed territory is to be worked out by bilateral negotiations between India and Pakistan as called for in the Simla agreement.