The Mahrattas at this time had got possession of the person of the Mogul emperor, Shah Alam, from whom Clive obtained the grant of Bengal in 1765, and to whom he assigned in return the districts of Allahabad and Kora and a tribute of 30o,000.
With the emperor in their camp, the Mahrattas were threatening the province of Oudh, and causing a large British force to be cantoned along the frontier for its defence.
The Mahrattas retreated, and all danger for the time was dissipated by the death of their principal leader.
The imprudent conduct of the Madras authorities had irritated beyond endurance the two greatest Mussulman powers in the peninsula, the nizam of the Deccan and Hyder Ali, the usurper of Mysore, who began to negotiate an alliance with the Mahrattas.
He signed a blank treaty of peace with the Mahrattas, who were still in arms, reversed the action of the Madras government towards the nizam, and concentrated all the resources of Bengal against Hyder Ali.