The most common and most likely answer to this crossword clue is the 7 letter word HEADMAN
I've seen this crossword clue in Financial Times
H
E
A
D
M
A
N
Buddy explains!
The straight part
We know that "Principal" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case principal = headman.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.
What does HEADMAN mean?
HEADMAN noun- The person in charge of an organization, clan, tribe, or other group.
- The leader of a village.
- Headmaster