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The pharmacological effectiveness of indoles, benzoxazepines and benzodiazepines initiated our synthesis of indole fused benoxazepine/benzodiazepine heterocycles, along with enhanced biological usefulness of the fused rings. Activated indoles <b>5</b>, <b>6</b> and <b>7</b> were synthesized using modified Bischler indole synthesis rearrangement. Indole <b>5</b> was substituted with the trichloroacetyl group at the C⁷ position, yielding <b>8,</b> exclusively due to the increased nucleophilic character of C⁷. When trichloroacylated indole <b>8</b> was treated with basified ethanol or excess amminia, indole acid <b>9</b> and amide <b>10</b> were yielded, respectively. Indole amide <b>10</b> was expected to give indole fused benoxazepine/benzodiazepine <b>11a</b>/<b>11b</b> on treatment with alpha halo ester followed by a coupling agent, but when the reaction was tried, an unexpectedly rearranged novel product, 1,3-bezodiazine <b>12,</b> was obtained. The synthetic compounds were screened for anticholinesterase and antibacterial potential; results showed all products to be very important candidates for both activities, and their potential can be explored further. In addition, 1,3-bezodiazine <b>12</b> was explored by DFT studies, Hirshfeld surface charge analysis and structural insight to obrain a good picture of the structure and reactivity of the products for the design of derivatised drugs from the novel compound.