Kotwal and his wife arrive at the darbar with a problem. The Kotwal's wife has seen the puppeteer's act. Dhani and Mani inform Tathachaya that whoever has seen the puppeteer's act is mesmerized by it. Krishnadevaraya is intrigued and decide to call the puppeteer to the darbar. Unknown to Tenali Rama, Tathacharya joins hands with the puppeteer to humiliate Tenali Rama.