Baoli Sahib is located near Nanak Sagar Dam on the banks of Ghaghar River about 2 km from Nanakmatta Gurudwara. As per the legend, the Yogis dried up the water in the whole area by their magical powers and challenged Nanak Dev ji to bring the water back.
Nanak Devi ji then instructed Bhai Marada to this task by asking him to drag the spade behind him to get the river back. He performed the task and the river followed until he looked behind to check upon the river. Due to his actions the river stopped at this place and Guru Dev ji asked the Yogis to complete the remaining task by their magical power. This brought realization to them of their fault and a Baoli was constructed after that known as Baoli Sahib.