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Rh Nizám, who, in direct breach of former treaties, took into his own pay the French troops dismissed by his brother. The Madras Council thereupon refused to pay up certain arrears of tribute due to Nizám Alí, until he gave them full satisfaction as to this point. The Nizám, however, declined to satisfy them, and pressed for his full arrears. His grudge against the English for supporting Raghuba and making overtures to the Rájá of Berár, had lately impelled him to concoct a secret league with the Poona Regency and Haidar Alí. But some new evidence of Haidar's treachery decided the Nizám to pause betimes on the brink of an open rupture with his late friends. Meanwhile his agents succeeded in putting the Governor-General on a false scent. Hastings was led to believe that Nizám Alí's quarrel with the English concerned only his arrears of tribute and the occupation of Guntúr. His Highness at any rate deigned to be appeased by timely assurances that his tribute should be paid, and the Madras troops recalled from Guntúr.

Early in 1780 Hastings, writing to Rumbold, declared himself 'convinced from Haidar's conduct and disposition, that he will never molest us while we preserve a good understanding with him.' But the time for a good understanding had passed beyond recall with the capture of Mahé and the occupation of Guntúr. Cut off from one outlet on the western, and from his chance of another on the eastern coast, Haidar resolved to wreak a long-hoarded revenge.