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Malatti's father has unexpectedly survived the fall from the train and now vows to take cruel revenge on McAllan. In Lhasa, the old capital of Tibet, seat of the Dalai Lama and at the same time a "forbidden city" for all foreigners, there is another dramatic encounter between the engineer and Badhama. In a dark dungeon, he thinks he recognizes McAllan and tries to stab the man he holds responsible for all the misfortune. He does not realize who he is stabbing, killing his own daughter in the process. The Dalai Lama's servants arrest Badhama and throw him in the dungeon. Malatti's father is sentenced to death, while McAllan sees the light of day again and is released.