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It is located on the bank of Khari river. Nayagarh was formerly known as Nayakanar, which in Odia language means "the abode of Nayaks". It was a princely state ruled by the Gajapati dynasty under suzerainty of British India. The rulers were Rajputs belonging to Chauhan clan and bore the title 'Raja'. In 1803 CE, it became a British protectorate after signing an agreement with its ruler Chhatrasal. After Indian independence in 1947 CE, this princely state merged with Union of India and became part of Odisha State (erstwhile Orissa). Later it became part of newly formed Sambalpur district until 1960 when new district called Nayagarh was carved out from erstwhile Sambalpur District consisting present day districts: Bargarh, Jharbandha (earlier Subarnapur), Nuapada & Sundergarh along with some parts from Cuttack District(now Bhadrak) & Balangir District(now Sonepur).