Shiromani Akali Dal chief Sukhbir Singh Badal on Thursday offered to resign from his post, owing moral responsibility for the party's defeat in the Punjab Assembly elections.
His offer of resignation was, however, rejected by the party's district presidents and senior leaders, according to a statement.
The party also decided to form a high-powered panel to take feedback from its leaders as well people on the election debacle.
The Aam Aadmi Party (AAP) had stormed to power after winning 92 of the 117 Assembly seats.
The Shiromani Akali Dal (SAD) had its worst-ever performance in the polls as it could win only three seats.
Sukhbir Badal himself lost from Jalalabad while his father and former Chief Minister Parkash Singh Badal lost from Lambi.
During his interaction with the party's district presidents and the senior leadership, Sukhbir Badal said, "The party and its well-being are supreme for me. I have always acted in the best interest of the party. I own moral responsibility for the party's defeat and ready to step down."
The party leadership rejected his offer in unison with many district presidents "bringing on record the hard work and intensive election campaign led by Sukhbir Singh Badal", the statement said.
A formal resolution was also passed unanimously to express confidence in the leadership of Sukhbir Badal.
The leaders said not only did Mr Badal led from the front but also inspired the party leadership as well as the cadre to give its best.
The leaders said though the results were not as per expectations, the party president could not be faulted in any manner whatsoever.
"People voted overwhelmingly for change and the entire opposition was swept aside in the resultant tsunami," they said.
The SAD leaders said at many places the voters did not even know the name of the Aam Aadmi Party (AAP) candidate but voted for it, adopting the narrative of "badlav" (change). This cost the SAD dearly, they said.
Asserting that all was not lost, the party leaders said the SAD has the ability to "rise like a phoenix from the ashes" and Sukhbir Badal would play a lead role in this.
Previous SAD governments have created benchmarks for development, infrastructure development and introduction of unique social welfare schemes, which are ingrained in the minds of people, they said.
People even wanted to reward the SAD on the basis of its past track record, especially after the non-performance of the Congress government, but were swayed by the voice of change at the last minute, they said.
Mr Badal briefed the district presidents that the party will not only take detailed feedback on the election debacle from them and other party functionaries but also from people.
"A high-powered committee is being formed for this purpose. It will hold the requisite meetings to take necessary feedback and come up with recommendations to rejuvenate the party," the statement said.