Men arrive at Number Six's flat after he's secretly administered a sedative. The Doctor is watching from the observation room and the Night Supervisor wonders if he has Number Two's approval for the operation. The Doctor insists they need to get the information and orders his technicians to hook electrodes up to Number Six. He wakes up in a trance and smiles, and then has a drugged man, Dutton, call Number Six and ask him for a breakdown due to a suspected security leak. Number Six mutters that he can't be asked and despite the Doctor's directed conversation, he refuses to answer. Number Six begins to crack but Number Two arrives in the observation room and orders the technicians to stop the process. She warns that Number Six would have broke rather than talk, and she doesn't want a broken man.
The next morning, Number Six wakes up and chats with Number Two, who is monitoring him. She wishes him a good day and then talks to her superiors, informing them they're preparing for the next night. A maid in a Marie Antoinette dress delivers breakfast to Number Six and jokes with him. After she departs, a messenger arrives with an invitation to the Village Carnival and Dance. The citizens gear up for the Carnival as Number Six looks on, stroking a black cat he's found. Number Two arrives and explains it's a yearly event and asks if he's coming. Number Six seems resigned to the inevitability of going. She suggests that he find a date and directs him to several attractive women. Number Six notices a woman sitting alone, the Observer, and Number Two says she's unsuitable. Number Six approaches her and the woman prepares to leave, but he says there's a reason she should stay: Number Two wants her to go. He asks her how she's been a burden but she refuses to answer and leaves. Intrigued, Number Six moves to follow her but a guardian sphere intervenes. Finally it relents and Number Six finds the woman has gone into the Town Hall. When Number Six tries to follow, he's repelled by a force field.
In the observation room, the Observer says it's not her fault that Number Six followed her. She watches him on the monitor screens as he walks through the Village and notices a black cat sitting in front of his flat. He takes it inside and the maid comes in and informs him that they're not allowed animals. She threatens to take the cat with her but backs down when Number Six asks her where all of the food supplies come from. After causing feedback on the TV monitor and arguing with a flower deliveryman, he retires for the night after ignoring the drink the night maid provides him. The Observer watches him and switches off the lights. Meanwhile, the Doctor talks to Number Two and worries if she's going to report him. She says she's going to ignore it and he asks for a directive about Dutton, who is being difficult. In his flat, Number Six paces irritably and tries to go out, only to find the door locked. He finds the black cat on his bed and sits in a chair, and the overhead flashes as a woman's voice says to sleep. He goes out the window and the Observer calls Number Two. Number Two tells her not to worry and monitors Number Six as he runs along the beach. She releases a guardian sphere which paces Number Six along the beach. Finally he collapses, exhausted, and it departs.
The next morning, Number Six wakes up and finds a corpse washed up on the beach. He examines it and finds a wallet with photos and a transistor radio. He returns to the Village as the Town Crier announces that Carnival is decreed for that night. He returns to find the black cat gone and the maid in a normal uniform. She tells him that his costume came: his own tuxedo. After she leaves, he listens to the radio. Number Two is well aware of what he's doing but the Doctor warns that he can't do what it likes. Number Two warns that Number Six is an individual, and must be handled carefully. She asks about Dutton and the Doctor informs her he'll have to take more extreme measures.
Number Six goes to an overlook and tries to get a signal on the radio. He picks up a man's voice speaking in some kind of coded message about torment and freedom. Number Two and the Observer arrive and ask him about the radio, which he makes no attempt to hide. Number Two admits she's sad that he isn't becoming happy and they can only indulge him for a limited time. She notes that he has his own Observer, a "privilege" reserved for only the most rebellious Villagers. She leaves and the Observer decries Number Six for breaking the rules and having no values. She says if she had the radio she would report it to Number One, but is clearly uncomfortable as he asks her more questions. She leaves and Number Six goes through the dead man's wallet. He then goes down to the stone boat and takes a lifesaver and rope, and goes into the woods to the beach and then on to the cave. He takes out the wallet and writes out a SOS message. In the observation room, the Observer tries to find him without success. She notifies Number Two, who is unconcerned. As she prepares to go, the Observer gets word that one of her other targets recently died.
Number Six puts the lifesaver on the corpse and puts the wallet in its pocket. He pushes it out to sea and turns to find Dutton standing in the cave. They know each other and Dutton is surprised and suspicious of Number Six, thinking he murdered the man. Number Six explains and Dutton admits he's been there a couple of months. They go inside the cave to talk and Dutton admits he told the Village superiors everything, but they didn't believe him. They plan to take him back to the hospital and by the time they determine he's telling the truth, it'll be too late. Dutton has been released for 72 hours before final interrogation but warns that he will soon cease to exist.
Later, Number Two, dressed as Peter Pan, greets a tuxedoed Number Six on the beach. They spar verbally and she accompanies him to the Carnival in the Town Hall. The Villagers are gathered in costume and Number Two invites them all to dance. She encourages Number Six to dance with his Observer, costumed as Little Bo Peep. The Doctor, dressed as Napoleon, asks after Number Six and notes they may have to ruin him. Meanwhile, Number Six mocks the Observer, who warns there are treatments for people like him. He wonders where Number Two gets her instructions and if Number One is there. The dance ends and Number Six goes down a corridor to a room and dons a white lab coat from a rack. Donning a pair of glasses, he finds a woman emerging from one of the doors. She has a termination order to be delivered to Number Two and Number Six offers to deliver it. Opening it, he finds Dutton's name. The doors of another room open and Number Six steps in to discover a file room, and beyond that a locked door with a key on a hook. He goes in and discovers a morgue. One of the drawers holds the dead man from the beach. Number Two arrives with the black cat, which she admits works there with her. She says that the note and the corpse have been amended to indicate that Number Six is dead.
They return to the Carnival where Number Two informs Number Six that he is the Cabaret and is on trial. Number Two will act as defense attorney and the Observer as prosecutor. The Maid, the Doctor, and the Town Crier are the three judges. Number Six is charged with having an illegal radio and the Observer presents the case. The farce of a trial proceeds with Number Two testifying against Number Six despite her status as a defense attorney. The Observer calls for the severest possible sentence and everyone applauds, including Number Six. Number Two then presents her defense and asks for clemency as Number Six is new and only guilty of folly. The judges consider the matter but Number Six calls a character witness: Dutton. Number Two has Dutton brought forward... dressed in a jester's costume and his mind destroyed.
The judges finish their deliberations and proclaim Number Six guilty. The Observer begs them to stop but Number Two says there is nothing to be done. The sentence is death and the people are ordered to carry it out. Number Six strides down through the crowd and down the hallway, and the Villagers scream and give pursuit. Number Six runs to the morgue and escapes through a hatch in the floor that they overlook. He proceeds through the tunnel and finds himself back in the hallway. He makes his way to a study containing a teletype machine behind a screen. He rips out the machine's wiring and then notices the Villagers through a one-way mirror. Number Two and the Observer enter and Number Two notes that they Villagers will never see the room, lacking Number Six's initiative. She informs him that the Observer is no longer assigned to him. Number Two laughs in triumph as the teletype comes back to life.
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