Gangadhar announces Manikarnikas new name as Queen Laxmibai to the people of Jhansi. Lacho laments that her dreams are over but Ali Bahadur assures her that she should not give up hope. Tatya Tope tells Moropant that he is amazed that Manu has become the Queen of Jhansi. Moropant is happy that his dream has come true. Sleeman tells Sakhubai and Jankibai that Gangadhar will have trouble repaying the loan. It will then be easy for Sakhubai to become the Queen of Jhansi. Sleeman is happy that the British rule is spreading. Manu tells Indu that she will request Gangadhar to let Prachi and her family stay with her. Gangadhar gets worried when he hears that the treasury is empty. Gangadhar refuses to levy more taxes on the subjects. Gangadhar tells his minister to give the message to Sleeman that he will repay the loan after three months. Sakhubai is happy that Gangadhar is in trouble. Queen Laxmibai desires to meet Gangadhar Rao but she wonders what shell talk to him.
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