Within a few days, the situation escalated to an extreme level with an incident that occurred in Nanded, known as the "Zenda Affair" in the Hyderabad Liberation War. The incident took place on 18 August 1947, just a few days after India's Independence Day. On this day, the Hyderabad State Congress urged the people of the state to hoist the tricolour flag. However, the Nizam declared that the state is sovereign, and the hoisting of any other flag would be considered an offense. Despite this, the tricolour flag of independent India was hoisted everywhere in the state on 15 August.
At the Congress office in Sarafa, Nanded, the tricolour flag was raised by the State Congress. As the day progressed, tension rose as the police, including the Deputy Superintendent of Police and the inspector, arrived to investigate. Despite threats, the State Congress leaders and workers refused to lower the flag. On 16 August, the flag continued to fly at the Congress office. The following day, Eid was celebrated, with both sides prepared for any eventuality. On 18 August, a Muslim delegation requested permission from the police to conduct a procession through Sarafa for Eid without any conditions being imposed.
The State Congress workers took the stand that they would die resisting but not retreat rather than take down the flag. It was finally decided that the flag should be lowered by one foot during the procession under the flag in Sarafa. On 18 August, there was a lot of tension in Nanded city. The police were on the streets. In the afternoon, Bhagwanrao Ganjve, Shamrao Bodhankar, Vinayakrao Doifode, etc. were near the flag on the roof of the Congress office. Selected activists like Keshavrao Kulkarni, Gangadhar Yerawar, and Ramesh Jain were present along with the leaders. Akhlaq Hussain stopped near the flag on the roof of the office as the procession reached Sarafa. Below in Sarafa, the huge crowd in the procession was chanting. It was an occasion where even the slightest mistake by anyone could have triggered the outbreak and resulted in bloodshed in Nanded.
The threat of arson and bloodshed under the national flag of India during the Eid procession by Razakars in Nanded city was spreading like wildfire.
Despite the efforts of Nanded Collector Shahabuddin, Police S.P., and senior citizens in Nanded to convince the activists to temporarily lower the flag, the State Congress workers refused. A meeting was held with selected leaders and activists, including Shamrao Bodhankar, Gopalshastri Deo, Bhagwanrao Ganjve, Vinayakrao Doifode, Nagnath Paranjape, Keshavrao Kulkarni, and Ramesh Jain. The Ittehadul Muslimeen district President of Nanded and the heads of Razakar, Akhlaq Hussain, and Shahabuddin were also present at the meeting.
Despite the tense situation and various pressures, the State Congress leaders and workers demonstrated remarkable composure and upheld the dignity of the tricolor flag. The tricolor flag remained unfurled.