The year 1324/1906 marks the cleavage and culmination of Muslim politics in the subcontinent, when the Aga Khan III led the Muslim delegation and met Lord Minto (1845-1914), the Viceroy of India from 1905, at Simla to demand the political rights of the Muslims of India. Simla was 1170 miles away from Calcutta, in the hills of northern India, above Delhi. It was the Anglo-Indian Olympus, where the British had been coming every summer since 1860, and by 1906 there were more than 1400 European dwellings, built on a series of ridges with the native town. At the centre of this was the Viceregal Lodge, five storeys high, furnished by Maples of Tottenham Court Road.
The deputation to the Viceroy consisted of the most influential leaders, such as Mohsin al-Mulk, Hakim Ajmal Khan, Sir Ali Imam, Sir Muzammallah Khan, Sir Rafiquddin Ahmad, Sir Muhammad Shafi, Sir Abdul Rahim, Sir Salimullah, Justice Shah Din, etc. Syed Razi Waste writes in "Lord Minto and the Indian Nationalist Movement 1905-1910" (Lahore, 1976, pp. 69-70) that, "Minto received the Muslim Deputation on October 1, 1906. Thirty-five prominent Muslim leaders from all over India gathered in the Ball Room of the Viceregal Lodge at Simla. Their leader was a young man of twenty-nine years, H.H. Aga Sir Sultan Mohamed Shah Aga Khan from Bombay, who besides being the head of the rich Ismaili sect of Muslims had close and friendly relations with prominent British people." Accordingly, a memorandum was submitted to the Viceroy, insisting that the position accorded to the Muslim community in any kind of representation direct or indirect, and all other ways affecting their status should be commensurate not merely with their numerical strength but also with their political importance. Lord Minto gave them a patient hearing, assuring that their political rights and interests as a community will be safeguarded in any administrative organisation. The Aga Khan realized that the Muslims should not keep themselves aloof from politics because the Congress was already proving incapable in representing the Indian Muslims. At length, the demands of separate electorate and weightage in number in representation to all elected bodies were accepted by the Viceroy Lord Minto, and incorporated in the Minto-Morley Reforms of 1909.
On October 24, 1906, the Aga Khan wrote a letter to Mohsin al-Mulk regarding a need to form a Muslim organisation what had been achieved at Simla. The letter reads: "It may well be that provincial associations should be formed with the aim of safeguarding the political interests of Muslims in various portions of India and similarly some central organisation for the whole." In the meantime, The All-India Muslim Educational Conference met at Dacca on December 30, 1906 and the letter of the Aga Khan was circulated among the delegates. The Conference unanimously resolved that a political association styled as the All-India Muslim League be formed to promote among the Muslims the loyalty to the British government, to protect and advance the political rights and interests of Muslims, and to prevent the rise among Muslims of India of any feeling of hostility towards other communities. The Aga Khan III was thus elected permanent President of the All-India Muslim League and Sayed Hussain Bilgrami was made the Honorary Secretary. M. Abdul Aziz writes in "The Crescent in the Land of the Rising Sun" (London, 1941, p. 140) that, "It is well known that His Highness the Aga Khan was the first President of The All-India Moslem League and the way in which he took a keen and sympathetic interest in the organisation and development of the League, is shown from his letter of appreciation in his capacity as its first President." According to "The Foundations of Pakistan" (ed. by Sayed Sharifuddin Pirzada, Dacca, 1969, 1st vol., p. 33), "In tracing the origins of Pakistan, some commentators give decisive importance to the separate electorates secured by the Muslim Deputation which was received by the Viceroy Lord Minto at Simla on Ocotber 1, 1906. The event has been described in the Diary of Lady Minto as `an epoch in Indian history.'" According to "The Encyclopaedia Americana" (U.S.A., 1980, 1st vol., p. 327), "The delegation established the Muslim League, which carried the seeds of Muslim separation and eventual creation of Pakistan." Aziz Ahmed also writes in "Islamic Modernism in India and Pakistan" (London, 1967, p. 66) that, "One of the chief promoters of this design of Muslim separatism in subcontinent was the Agha Khan."
At the sixth annual session of Muslim League held on March 22-23, 1913 at Lucknow, the Aga Khan resigned from the presidency. He hinted a numerous reasons, but did not propose to cut himself away from the League. "Resignation" he said, "frees me from that necessarily judicial character that attaches to the presidency. The League does not need a leader but leaders." According to "Encyclopaedia of Asian History" (ed. Ainslie T. Embree, London, 1988, 1st vol., p. 47), "The Ismaili leader, Agha Khan, who presided over the League's destiny from 1906 to 1913, and resigned on November 3, 1913." On the seventh session of the League at Agra, held on December 30-31, 1913, Sayed Wazir Hasan (1874-1947), the Secretary of League from 1912 to 1929, announced the resignation of the Aga Khan in the meeting, expressing, according to the "Foundations of Pakistan" (Dacca, 1969, 1st vol., p. 323) that, "it would be a calamity for Muslims when His Highness resigned." Sir Ibrahim Rahimtullah appealed to the Aga Khan not to place his resignation in their hands today and to continue as President till the rules of the League were altered. The Aga Khan said that he would remain President for the time suggested. He said also that in no case, it would severe his connection with the League as Vice-President. In a meeting of the Council of the League, held on February 25, 1914, the Aga Khan was declared the Vice-President of Muslim League, and Sir Ali Muhammad Khan (1879-1931), the Raja of Mahmudabad was elected as the second President of Muslim League in the eight session at Bombay on December 30, 1915.