Martin is shocked to see that Gangadhar has managed to retrieve the treasure. Gangadhar asks Martin to come to the village, where he will hand over the treasure and take the administrative powers of the 11 villages. Martin feels humiliated and decides that he will not let Gangadhar take over the villages. The villagers are also happy to know that Laxmibai successfully took the treasure from Martin and handed it over to Gangadhar. Gangadhar arrives to the village to sign the treaty. Martin arrives at the village and is enraged to see Karma alive. He refuses to sign the treaty and keeps a condition that Karma will have to lick his shoes. Gangadhar gets angry at Martin, but Martin still raises his gun to shoot Karma. Raja (Laxmibai) intervenes and saves Karma. Raja challenges Martin to a duel using English weapons. Martin accepts the challenge. The contest is scheduled for the next day.