This would have led to war, but the Bengal government promptly interfered, cancelled altogether the demands made by the Madras government, and for the time patched up the quarrel.

The Nizam professed to be satisfied, but he saw that trouble might arise when the English were more prepared to enforce their demands.

He therefore entered into negotiations with Hyder Ali and the Mahrattis for an alliance, whose object was the entire expulsion of the British from India.
"The Mahrattis from Poonah were to operate against Bombay; those in Central India and the north were to make incursions into Bengal; the Nizam was to invade the Northern Circars; and Hyder was to direct his force against Madras.

Hyder at once began to collect military stores, and obtained large quantities from the French at Mahe, a town they still retain, on the Malabar coast.
"The Madras government prepared to attack Mahe, when Hyder informed them that the settlements of the Dutch, French, and English on the Malabar coast, being situated within his territory, were equally entitled to his protection; and that, if Mahe were attacked, he should retaliate by an incursion into the province of Arcot.

In spite of this threat, Mahe was captured.