The Misfit of Demon King Academy Episode 8

The Final Duel (二人の決勝戦, Futari no Kesshōsen) is the 8th episode of Maō Gakuin no Futekigōsha anime series. 

Synopsis
Anos and Lay battle head-to-head at the Dilhade Magic Sword Tournament finals. With Sheila being taken hostage, the two are unable to fight at their full potential and come to a decision. Just as the showdown reaches its climax, a huge Magic Circle appears in the arena. The scenery around Anos and Lay begins to distort and they are taken into an alternate dimension. The mastermind behind the recent events finally reveals his true identity.

Characters
In order of appearance:

Summary
Before the duel commences, special rules are implemented which impact both Lay and Sheila. Lay praises Anos for his ability to fight despite his magic being drained. However, he decides to fight on his own terms which allows them to go all out. Ultimately, Anos is victorious. It is then revealed that Melheis was the mastermind behind the tournament. Anos is challenged by Melheis, Gaios, and Ydol. However, Lay takes out Gaios and Ydol. When confronted, Melheis reveals he has Sheila which causes Lay to leave the  to save her. A confident Melheis heads to an Absolute Space where he attacks Anos and Lay. Sheila becomes a sword that Lay uses to slash the Absolute Space.

Anos then confronts a stunned Melheis where he frees him from his brainwashing. Returning to the arena, Anos is declared the winner of the tournament. After healing Lay, Anos resurrects Sheila, revealing her true form was a sword. Afterward, Sasha gives Anos a sword as a commemorative gift.

Anime Differences

 * In the web novel, in addition of holding Sheila hostage, Melheis also threatens to erase Sheila's existence by destroying 46 jewels.