Treaty of Allahabad

The Treaty of Allahabad was the direct diplomatic consequence of the Battle of Buxar fought on October 22, 1764. The British East India Company (EIC), led by Major Hector Munro, decisively defeated the combined combined forces of Mir Qasim (the deposed Nawab of Bengal), Shuja-ud-Daula (the Nawab-Wazir of Awadh), and Shah Alam II (the fugitive Mughal Emperor). This victory established the EIC as the supreme political and military arbiter of Northern India.

Negotiation and Signatories

Robert Clive, who returned as the Governor of Bengal for his second term in May 1765, negotiated and executed two separate treaties at Allahabad in August 1765. The first agreement was signed with Mughal Emperor Shah Alam II on August 12, 1765, and the second was signed with Nawab Shuja-ud-Daula on August 16, 1765.

Core Provisions of the Treaty of Allahabad

Agreement with Mughal Emperor Shah Alam II (August 12, 1765)

The treaty with the sovereign dismantled traditional Mughal authority in the eastern provinces and institutionalized British administrative control.

• Grant of Diwani Rights: The Mughal Emperor granted the permanent Diwani (the right to collect fiscal revenues and administer civil justice) of Bengal, Bihar, and Orissa to the East India Company.
• Imperial Tribute: In return for the Diwani, the Company agreed to pay an annual tribute of 26 lakh rupees to the imperial treasury.
• Territorial Allocation: The districts of Kora and Allahabad were detached from the state of Awadh and handed over to Shah Alam II as his personal demesne.
• Nizamat Expenses: A fixed sum of 53 lakh rupees was allocated to the Nawab of Bengal for Nizamat functions (military defense, police, and administration of criminal justice), which was managed under Company supervision.

Agreement with Nawab Shuja-ud-Daula of Awadh (August 16, 1765)

The second treaty aimed to convert Awadh into a dependent buffer state protecting Bengal from western invasions.

• Restoration of Territory: Shuja-ud-Daula was restored to the throne of Awadh, minus the districts of Kora and Allahabad given to the Emperor.
• War Indemnity: The Nawab agreed to pay a war indemnity of 50 lakh rupees to the Company to cover the expenses of the Buxar campaign.
• Subsidiary Troops: The Nawab agreed to maintain a British military contingent within Awadh at his own financial expense for the defense of his frontiers.
• Commercial Concessions: The Company secured absolute duty-free trade privileges throughout the territories of Awadh.

Impact on Bengal: The Dual System of Government (1765–1772)

Division of Power and Responsibility

The treaty facilitated the establishment of the Dual Government (Diarchy) in Bengal. The Company acquired the Diwani (revenue rights), while the Nawab retained the Nizamat (administrative and judicial duties). This allowed the EIC to exercise de facto power without any de jure accountability, leaving the Nawab with total responsibility but no financial resources.

Mechanism of Revenue Collection

Because the Company lacked a formal administrative machinery to collect taxes directly, Clive appointed two Deputy Diwans: Mohammad Reza Khan for Bengal and Raja Shitab Roy for Bihar. This system led to institutionalized extortion, agricultural neglect, and directly intensified the severity of the Great Bengal Famine of 1770. The system was ultimately abolished by Warren Hastings in 1772 when the Company decided to “stand forth as the Diwan.”

Geopolitical Intersections: Marathas and Mysore

Impact on the Maratha Empire

The Treaty of Allahabad altered the strategic calculations of the Maratha Empire, which was recovering from its defeat at the Third Battle of Panipat (1761) under Peshwa Madhavrao I.

• Loss of Imperial Leverage: By taking Shah Alam II under their protection at Allahabad, the British denied the Marathas custody of the titular emperor, neutralizing their ability to issue imperial sanctions in Northern India.
• The Buffer State Mechanism: The alignment of Awadh as a British-backed buffer zone blocked the Marathas’ northern expansion routes into Bengal and Bihar.
• The 1771 Reversal: This arrangement lasted until 1771, when Mahadji Shinde successfully marched to Delhi, escorted Shah Alam II back to the imperial throne, and declared the Treaty of Allahabad nullified. This action forced the Emperor to forfeit Kora and Allahabad back to the Marathas.

Indirect Repercussions on the Kingdom of Mysore

While geographically distant from the site of the treaty, Mysore under Haidar Ali was heavily impacted by the structural shifts caused by the settlement.

• Consolidation of British Power: The revenue generated from the Diwani of Bengal financially subsidized the EIC’s military campaigns in the south, providing the Madras Presidency with resources to wage the Anglo-Mysore Wars.
• Strategic Isolation: The treaty allowed the British to neutralize Northern Indian powers, preventing a pan-Indian coalition between Northern regional rulers and southern states like Mysore against European encroachment.

Summary of Territorial and Financial Adjustments

UPSC Prelims Facts and Historical Trivia

The Blind Emperor

Shah Alam II spent his years under British protection at Allahabad as a virtual prisoner. When he chose to return to Delhi with Maratha assistance in 1771, the British discontinued his annual 26 lakh rupee tribute, viewing his alliance with the Marathas as an act of hostility.

Institutional Precursor to the Subsidiary Alliance

The military clause in the treaty signed with Shuja-ud-Daula—whereby British troops were stationed in a foreign territory at the native ruler’s expense—served as the operational blueprint for the formal Subsidiary Alliance System later developed and weaponized by Lord Wellesley in 1798.