Unfortunately the plan went awry; some of the ships, due to the change in current and wind,

arrived at Hooghly instead of Chittagong and anchored off the factory in Hooghly after being
joined by their Madras troops. The presence of a large number of war ships alarmed Shaista
Khan and he immediately offered a truce. However the peace was broken again when some
Company troops misbehaved with Shaista Khan's troops in Hooghly on 28 October 1686 for
which the former were severely beaten by the latter. At the same time the admiral opened fire
and burnt down 500 houses; property losses were about thirty lacs of rupees. However a truce
was again obtained between Mr. Charnock and the local Foujidar, and the English were allowed
to put saltpetre on board their ships. However, Shaista Khan upon hearing this ordered the
closing and confiscation of all their factories and properties in Bengal and sent a large force to
drive out the English from Hooghly.

Upon hearing the news of Shaista Khan's plan, Mr. Charnock determined that it was no longer
safe to remain in Hooghly and decided to move downstream to Sutanuti, a small hamlet on the
banks of the river Hooghly on 20 December 1686. At this time their ships in Bengal required
extensive repairs and the remainder of their fleet were considered in danger. In this situation they
considered that they would be extremely fortunate if they could hold their current position
instead of their desires on Chittagong and for this matter they decided to ask forgiveness from
the Emperor and requested to reinstate the previously obtained Firman.

Peace treaty was again offered by the governor at the end of December 1686 but it was mainly to
buy out time for attack and by February 1687 a large troop of Shaista Khan's army arrived at
Hooghly to drive the Company out of Bengal. Charnock decided it was not safe to remain in
Sutanuti and moved to the island village at Hijli. There he remained with his soldiers in an
utterly inhospitable place full of mosquitoes, snakes and tigers. The Governor's troops did not
bother them there since they knew the Company would not be able to survive long there. In fact,
within three months about half of Charnock's soldiers died and the remaining half were ready to
be hospitalized.

With his back to the wall, Charnock was desperately willing to negotiate with Shaista Khan to
get out of this mess. Luck favored him because of an unexpected event. At the time when
Nicholson was ordered to proceed to Chittagong, Sir John Child was ordered to withdraw the
company's establishment from Bombay, commence hostilities on the western coast, blockade
Mughal harbors and attack their ships anywhere to be found. Emperor Aurangzeb wanted to
reconcile with the Company to ensure uninterrupted voyage of pilgrims to Mecca and asked his
governors to make terms with them.

As a result, a peace treaty was signed between Shaista Khan and Charnock on 16 August 1687.
Shaista Khan allowed them to remain in Bengal, however to be limited only to Uluberia, a small
town on the bank of river Hooghly south of Sutanuti, where they were allowed to make a port
and do business from there, but their war ships were strictly not allowed to enter Hooghly.
Charnock arrived at Uluberia, started making a dock there, however soon started to dislike the
place and wanted to return to Sutanuti. At this time the governor asked them to return and settle
at Hooghly, ordered them not to build any structure at Sutanuti and asked Charnock to pay a
large sum of money for compensation. While not in a position to fight against the Governor's
troops, two Company agents were sent to Dhaka to plead to the governor to allow them to return
to Sutanuti and build a fort there.