Bibi Kaulan Ji was the daughter of Qazi Rustam Khan. Bibi Kaulan Ji was the resident of the village Mujang in Lahore, which incidentally was also the village of the sufi saint, Sain Mian Mir Ji. Bibi Kaulan Ji was in the holy company of Sain Mian Mir Ji when she had the good fortune of meeting Shri Guru Hargobind Sahib Ji. As a result of this meeting with Guru Sahib Ji, she became an ardent follower of Gurbani. Seeing Bibi Ji’s devotion to Gurbani & to the tenets of sikhism as propagated by Shri Guru Nanak Dev Ji, the Qazi tried his best to dissuade Bibi Ji, but Bibi Ji was firm in her faith .On his failure to dissuade Bibi Kaulan Ji, the Qazi issued an edict awarding death sentence to Bibi Ji.
On receiving this news , Sain Mian Mir Ji sent Bibi Ji along with his disciple, Abdullah Shah Ji in the protection of Sri Guru Hargobind Sahib Ji. Guru Sahib Ji along with Bibi Ji & his other followers reached Shri Amritsar Sahib via Madho Ki Brar (Gurudwara Gurusar Sahib). On reaching Kaulsar Sahib in Shri Amritsar Sahib, the old name of which was Fullan Di Dhab, Guru Sahib arranged residence for Bibi Kaulan Ji. Bibi Kaulan Ji spent her entire life at Kaulsar Sahib following the tenets of sikhism & performing seva. Reciting gurbani & performing seva, at one stage in her life, Bibi Ji had a desire to have a son of her own. Guru Sahib Ji declared that Bibi Ji shall be blessed with such a son as shall immortalize her in the world. Guru Sahib Ji entrusted Baba Budha Ji with the holy task of constructing a sarovar (holy pond) in front of Kaulsar Sahib & asked Bibi Kaulan Ji to consider the sarovar her son. The work on the sarovar started in the year, 1624 which got completed in the year ,1627 under the supervision of Baba Budha Ji. Guru Sahib Ji advised his followers to take a holy dip in this sarovar before taking a holy dip in the sarovar of Sri Amritsar Sahib. The sarovar Kaulsar Sahib has been named after the most holy name of Bibi Kaulan Ji.