After the defeat of the confederate army under the command of Mir Kasim a new situation showed up.
Mir Kasim was no longer in the picture. Robert Clive came to terms with the Nawab of Oudh and the Mughal Emperor Shah Alam the II.
Most important was Clive’s understanding with Shah Alam the II.
Clive agreed to handover Kara and Allahabad to him and in return for this Shah Alam II granted the diwani rights of Bengal, Bihar and Orissa to the English East India Company on an annual payment of 26-lakhs of rupees.
The grant of diwani rights meant that the English East India Company would henceforward collect the revenues of Bengal, Bihar and Orissa.