Malerao shows off the gifts given to him by the Britishers to Ahilya and asks her to meet Colonel Hughes. She calls Colonel Hughes to Holkar Wada to meet him at Malerao's request. Meanwhile, Colonel Hughes gives Ahilya a present which offends her. Colonel Hughes asks Ahilya to trade freely with the British. However, Ahilya thinks that the Britishers are trying to colonize Malwa and denies their request. Ahilya declares that she won't align with the Britishers at any cost.