The second legislative council election to Madras Presidency after the establishment of diarchical system of government by the Government of India Act, 1919 was held in 1923. Voter turnout was higher than the previous election. Swarajists, a breakaway group from Indian National Congress participated in the election. The ruling Justice Party had suffered a split, when a splinter group calling themselves anti-Ministerialists left the party. It won the highest number of seats but fell short of a majority. Nevertheless, Madras Governor Willington invited it to form the government. Incumbent Justice First Minister Panagal Raja was nominated by party leader Theagaraya Chetty to continue as First Minister for a second term. The government survived a no-confidence motion, brought against it on the first day of its tenure by the opposition headed by C. R. Reddy.

The Justice Party, officially the South Indian Liberal Federation, was a political party in the Madras Presidency of British India. It was established on 20 November 1916 in Victoria Public Hall in Madras by Dr C. Natesa Mudaliar and co-founded by T. M. Nair, P. Theagaraya Chetty and Alamelu Mangai Thayarammal as a result of a series of non-Brahmin conferences and meetings in the presidency. Communal division between Brahmins and non-Brahmins began in the presidency during the late-19th and early-20th century, mainly due to caste prejudices and disproportionate Brahminical representation in government jobs. The Justice Party's foundation marked the culmination of several efforts to establish an organisation to represent the non-Brahmins in Madras and is seen as the start of the Dravidian Movement.