Han Lung discovers that Chi-Hao has been chosen as Chin-Pei's successor and becomes intensely jealous. He conspires with Dung-Shun to have Chi-Hao crippled. He lures Chi-Hao into the forest, where Dung-Shun's three new Japanese thugs ambush him. They overpower him and break his hands. Later, they visit his old master's school and kill him as well. Yen helps Chi-Hao recuperate and again tries to woo him, but he resists her. Finally, Chi-Hao's fellow students locate him and encourage him to regain his fighting spirit. He begins training and soon overcomes his wounds. Yin-Yin arrives, but withholds the news of her father's death. A rejuvenated Chi-Hao successfully defeats all the other students to become Chin-Pei's representative for the upcoming tournament. Han Lung returns to Dung-Shun with the news, but Dung-Shun's son blinds him and casts him out.