By the time Khan arrived at Delhi on July 1, 1857, the city had already been taken by rebel forces and the Mughal ruler Bahadur Shah II had been proclaimed Emperor of India. The emperor's eldest son, Mirza Mughal, also called Mirza Zahiruddin, had been given the title of chief general, but this prince had no military experience. This was the time when Bakht Khan along with his forces arrived in Delhi on Wednesday 1 July 1857. With his arrival the leadership position did improve. Bakht Khan's superior abilities quickly became evident, and the emperor gave him actual authority and the title of Saheb-I-Alam Bhadur, or Lord Governor General. Khan was virtual commander of the sepoy forces, although Mirza Zahiruudin was still the commander in chief.
Bakht Khan faced many problems which needed his immediate attention. The first and foremost problem was financial, to solve which he obtained from the Emperor authority to collect taxes. The second problem was the logistical one of supplies, which became more and more acute with the passage of time and even more so when British forces assaulted the city in September. The British had many spies and agents in the city and were constantly pressurizing Bahadur Shah to surrender. The situation around Delhi proceeded to deteriorate rapidly; Bakht Khan's leadership could not compensate for the rebels' lack of organization, supplies and strength on the part of their monarch. Delhi was besieged on June 8. On September 14 the British assaulted the Kashmiri Gate and Badur Shah fled to Humayun's Tomb before surrendering to the British, against Bakht Khan's pleas, on September 20, 1857.
Bakht Khan himself fled Delhi and joined rebel forces in Lucknow and Shahjahanpur. In 13 May 1859 he was mortally wounded and died. He lies buried in the Graveyard of Nanser, now in Pakistan, also called Koz Band.
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