General Arthur Wellesley, later Duke of Wellington, who commanded the British forces in South India, restored Baji Rao II to the Peshwaship in May 1803. In the meantime Yaswant Rao Holkar organized an anti-British confederacy between Sindhia and Bhonsle along with the Nizam. This group resisted the British claim to Paramountcy in India and war was declared in August 1803.
Arthur Wellesley led the British army in South. India while Lord Lake commanded it in the North. Wellesley within four months time secured very impressive gains in Deccan, Ahmednagar fell in August 1803 itself, primarily because of the change of attitude of the commander of Maratha confederacy, who was a born European.
This confirms the contention that the early victories of the British owed more to cunning than to strategy, the deceit than to valour. In September Bhonsle and Sindhia were defeated at Assai, north of Aurangabad. Though it was a decisive victory for the English, their losses in men and material were heavy.
Although Bhonsle and Sindhia fought the British jointly, separate treaties were concluded with them. By the Treaty of Deogaon in December 1803, Bhonsle ceded Cuttack to the Company and Western Berar to the Nizam.
By the Treaty of Surji-Anjangaon (December 1803) Sindhia ceded to the British Extensive areas like Ganga-Yamuna Doab, Delhi-Agra area, Broach, Ahmednagar and Ajanta hills up to Godavari. Sindhia was forced to renounce his claim and control over the puppet Mughal Emperor Shah Alam II of Delhi. He also renounced his claims on the Peshwas, the Nizam, and the Gaikwad.
By another treaty signed in February 1804 at Burhampur, a subsidiary force was stationed in Sindhia’s territories for his protection. This two of the powerful Maratha factions were put under control by, Lord Wellesley.
The Napoleonic War and the dread of Franco-Russian invasion of India haunted the British statesmen in Indian and in London. Hence they followed a policy of total nonintervention in the India affairs, particularly in Maratha puzzle, at least for a decade from the Treaty of Rajghat with Holkar in 1805.
Peshwa Baji Rao II was waiting for an opportunity to shake off the control of the British over him. He consolidates his authority and began anti-British negotiations with Sindhia, Holkar and Bhonsle. The attitude of the Peshwa did not go unnoticed in eyes of the British. In June 1817 the Peshwa was compelled to sign a new treaty at Poona by which he renounced his leadership of Maratha Empire and engaged not to transact any business with any other power, native or foreign except through the British Resident.
The Peshwa ceded to the company territories worth 34 lakhs and transferred his right on Malwa, Bundelkhand and Hindustan. This treaty was a death-blow to the authority of the Peshwa. Meanwhile in the Bhonsle state a succession dispute arose and the British government by a subsidiary alliance in May 1816 deprived Nagpur of its independence and thus hastened the collapse of the Maratha power.