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26 Doab were ceded to the British, and he pawned his jewels, which were taken to England. In May 1857, just at the commencement of the Mutiny, he died; and on his death-bed he told his son and successor, Afzul-ud-Daula, that as the British had always been friendly to the Nizams, so he should continue to be faithful to the English.

Nizam Afzul-ud-Daula followed his father's advice, and all through the terrible days of the Mutiny, he, and his minister, Sir Salar Jung I, stood by the English, thus preventing the Mutiny from spreading into southern India. In 1858 "Our Faithful Ally" received the thanks of the British Government, and a new treaty was then made between the Nizam and the English by which Osmanabad and the Raichur Doab Districts were restored to the Nizam, the assigned District of Berar being taken in trust by the British Government for the purposes specified in the treaty of 1853. (In November 1902 the assigned District of Berar was leased in perpetuity to the British Government at an annual rental of twenty-five lakhs of rupees.)

In 1869 Afzul-ud-Daula died and he was succeeded by his son, Mir Mahabub Ali Khan, who was then only three years old.