Therefore they forced Mirzafar to renounce the throne for his son-in-law Mirqasim. Mirqasim was enthroned with the favor of Englishmen and he rewarded them satisfactorily. He however negated English hopes and soon emerged as a threat to their position. Mirqasim expected that since he had paid the Company adequately, they should leave him alone to govern Bengal. These further paved the way of the battle of Buxar.
The English did not like the Nawab's attempts to clarify whether the 'Farman' of 1717 by the Company's servants was being misused or not. The Forman said that the goods for sale in abroad as well as indigenous would be free of duties. Mirqasim took measures to stop the illegal selling of Dastaks or free trading passes to the friendly Indian businessmen, who by the virtue of Dastaks were able to avoid the custom duties or taxes and thus earned money in unfair means from the trading.
The Zamindars and Indian officials were forced to pay gift or bribes to the Company officials. Mirqasim tried to stop this nuisance and hoped to make a stronger Bengal by freeing it from the control of East India Company. The English merchants could not bear this any more as they were not ready to accept the equality between them and the native Indians. The truth was that the English wanted to be the sole masters of Bengal. While Mirqasim wanted to see himself in the role of an independent ruler, the English wanted to use him as a mere tool in their hands as they put him in his power. In this situation the war was inevitable between Mirqasim and the English.
The conflict began with the incidence at Patna where a quarrel and clash occurred between an English Chief and a Nawab which again supported as one of the main reasons of the battle of Buxar.. An agitation occurred during the summer of 1763. Nawab's army was defeated in four successive battles. Mirqasim retreated to Patna and then to Audh. Here he got the support of Shujauddoulah, the Nawab Wazir of Audh. Shujauddoulah also joined the wandering Emperor Shah Alam II. The fighting between the Nawab and British started in the autumn of 1764 at Buxar in Bihar on October 22. Shah Alam joined the British camp, while Shujauddaulah escaped in Rohilakhand and Mirqasim disappeared in abstruseness.
Battle of Buxar was a decisive battle in which the shackles of company rule strengthened upon Bengal. The English had been rivals of the existing authority of Bengal. The power of British was now unchallenged and about to receive imperial recognition. The battle of Buxar also placed Audh under the company. It also enhanced the British ascendancy in Bengal. Nawab depended on British for internal and external security. The then Nawab of Bengal signed a treaty with the company on 20th February, 1765. The treaty said that the Nawab would dissolve most of his army and to administer Bengal through a deputy Subahdar, who was to be nominated by the company and could not be dismissed without the approval of the company.
The Company thus after the battle of Buxar gained supreme control over the administration or Nizamat of Bengal. Shah Alam II, who was the titular ruler of Mughal Empire, company got the Diwani, by which it was able to collect the revenue of Bengal, Bihar and Orissa. Thus Company's dominance over Bengal was legalized and it could earn the duties and revenues from the most prosperous Indian province. As the Diwan, Company was able to collect taxes while on the other hand they had the power to nominate the Subahdar on behalf of the Nawab and thus they also gained administrative power. They controlled the army and finances directly and its administration indirectly. As a consequence British had power without responsibility while the Nawabs had only responsibility of administration but no power to perform the responsibilities.