The Treaty of Allahabad was a critical turning point in the relationship between the British East India Company and the Indian subcontinent. In the aftermath of the Battle of Buxar in 1764, which saw the British forces led by Robert Clive achieve decisive victory against the combined armies of the Mughal Emperor Shah Alam II, the Nawab of Bengal, and the Nawab of Oudh, the treaty was negotiated and signed in 1765. The Treaty formalized the East India Company's control over the regions of Bengal, Bihar, and Orissa, effectively establishing the Company as a sovereign power within India.

One of the most significant provisions of the treaty was the permission granted to the Company to collect revenue in the aforementioned territories. This not only solidified British dominance in the region but also laid the groundwork for their extensive administrative and military presence in India. The treaty granted the Company the power to exercise governance on behalf of the Mughal Emperor, thereby setting a precedent for future colonial rule.

Furthermore, the Treaty of Allahabad also included obligations on the part of the Mughal Emperor, such as the renewal of the Company's privileges and the recognition of British authority in certain territories. This agreement showcased the transition of power from Mughal rule to British control, marking the beginning of a new era in Indian history as the British East India Company evolved into a significant political force.