Nelson is shell-shocked to see his wife Mrs. Rose Nelson and his sister Ms. Jane Nelson with Laxmibai. Laxmibai orders that his soldiers surrender and that he release the prisoners of Jhansi. A frightened Nelson asks his men to drop their weapons. Laxmibai then orders that he vacate the palace and promises him a safe passage. When Nelson accuses her of kidnapping innocent women, she retorts that he too had seized her palace, holding Damodar at gunpoint! Rose pleads with Nelson to leave Jhansi but Hamilton refuses to vacate the palace, and orders Laxmibai to kill Nelson's family! The people of Jhansi too demand blood for blood but Laxmibai asserts that she will not kill them. Laxmibai assures Nelson that she will not harm his family but not release them either unless he vacates the palace.