The relation of the Ismailis with the Abbasids and Khwarazmshah had already been improved. The relations of Khwarazmshah with the Abbasids and Ismailis were however strained in due course. Meanwhile, Jalaluddin Khwarazmshah had been defeated by Chenghiz Khan in 618/1221 on the bank of the Indus, and he had to spend three years in India. The impact of the ceaseless Mongolian invasions forced the Khwarazamins of Bukhara and Samarkand to escape, and most of them took refuge in the Ismaili territory in Kohistan. The Ismailis helped them with all provisions. About this time, the Ismailis occupied Damghan (the Arabs, ad-Damghan), the capital town of the province of Kumis near Girdkuh. In the meantime, Jalaluddin Khwarazmshah tried vainly to restore his broken kingdom in 622/1225. He charged Nishapur to his officer, Orkhan, who subsequently entrusted it to his one deputy, who massacred the Ismaili settlements in Kohistan. It seems that after some initial hostilities, a peace treaty was negotiated in 624/1227 between the Ismailis and Khwarazamshah. According to the truce, the Ismailis were allowed to retain their hold on Damghan in return for the payment of an annual tribute of 30,000 dinars. Orkhan however continued his enmity, therefore, three Ismaili fidais once fell upon him and killed him outside the city in a reprisal for raids against the Ismaili settlements in Kohistan. The three fidais were arrested and killed. Muhammad Nasawi (d. 645/1250) writes in 'Sirat-i Jalaluddin' (ed. Mujtaba Minovi, Tehran, 1965, p. 232) that the three fidais with their last breaths, shouted: 'We are sacrifices for our Lord Alauddin.'
It was at this time that Badruddin Ahmad, the envoy of Alamut, was on his way to see Jalaluddin Khwarazmshah. Hearing of these occurrences, he wrote to vizir Sharf al-Mulk, asking his advice on whether to continue his journey or turn back. The vizir, fearing for his life, was too happy to welcome the Ismaili envoy. He therefore urged the envoy to join him and promised to do all he could to help him in his mission. The two now travelled together. When they reached the plain of Serat, in a moment of abandon at an eating session, Badruddin said: 'Even here in your own army, we have our fidais, who are well established and pass as your own men.' Sharf al-Mulk insisted eagerly on seeing them, and gave him his kerchief as a token of safe-conduct and immunity. Badruddin thereupon summoned five fidais, and when they came one of them, an Indian, said to Sharf al-Mulk: 'I would have been able to kill you, I did not do so, because I had not yet received orders to deal with you.' When Sharf al-Mulk heard these words, he cast off his cloak and sat before them in his shirt and said: 'I am the slave of Alauddin as I am the sultan Jalaluddin's slave, and here I am before you. Do with me as you will.' Words of this reached the Jalaluddin, who at once sent orders to burn the five fidais alive. It seems that the Ismaili envoy, Badruddin cut down his way and returned to Alamut, while the vizir pleaded for mercy for them, but of no avail, and was forced to comply with sultan's orders. A great fire was kindled at the entrance of his tent, and the five fidais were thrown into it, and the name of Alauddin Muhammad was on their lips with their last breaths.
In Alamut, the Ismailis took serious notice of the above event, and resolved to confront once for all with Jalaluddin Khwarazmshah in reprisal, but Alauddin Muhammad efficiently tackled the situation. He sent his envoy, Salauddin to vizir Sharf al-Mulk at Bardha'a. Nasawi (d. 645/1250) personally witnessed the aftermath and writes, 'I was with Sharaf al-Mulk at Bardha'a, when an envoy called Salauddin came to him from Alamut and said: 'You have burnt five of our fidais. If you value your safety, you must pay a bloodwit of 10,000 dinars for each of them.' These words appalled and terrified Sharaf al-Mulk, so that he became incapable of thought and action. He favoured the envoy all others with generous gifts and splendid honours, and ordered me to write him an official letter, reducing by 10,000 dinars the annual tributes of 30,000 dinars which they were supposed to bring to the sultan's treasury. Sharaf al-Mulk then affixed his seal to the document.' (op. cit., pp. 163-6)