The Regulating Act was passed in the British Parliament in June 1773. It was the first parliamentary ratification and authorization defining the powers and authority of the East India Company with respect to its Indian possessions.
- The East India Company was in severe financial crisis and had asked a loan of 1 million pounds from the British government in 1772.
- Allegations of corruption and nepotism were rampant against company officials.
- There was a terrible famine in Bengal where a huge population perished.
- The Dual form of administration instituted by Robert Clive was complex and drawing a lot of complaints. According to this system, the company had Diwani rights (obtained after the Battle of Buxar) in Bengal and the Nawab had Nizamat rights (judicial and policing rights) as secured from the Mughal Emperor. In reality, both powers were vested with the company. The farmers and the general population suffered as their improvement was neglected and the company was only concerned with maximising revenue.
- Lawlessness increased in Bengal.
- The defeat of the company against Mysore’s Hyder Ali in 1769.
- This act permitted the company to retain its territorial possessions in India but sought to regulate the activities and functioning of the company. It did not take over power completely, hence called ‘regulating’.
- The act provided for appointment of a Governor-General along with four Councillors in the Presidency of Fort William (Calcutta), jointly called the Governor-General in Council.
- As per this, Warren Hastings was appointed as the Governor-General of the Presidency of Fort William.
- The Governors in Councils at Madras and Bombay were brought under the control of Bengal, especially in matters of foreign policy. Now, they could not wage war against Indian states without Bengal’s approval.
- The company directors were elected for a period of five years and one-fourth of them were to retire every year. Also, they could not be re-elected.
- The company directors were directed to make public all correspondence on revenue, civil and military matters with Indian authorities before the British authorities.
- A Supreme Court of Judicature was established at Calcutta with Sir Elijah Impey as the first Chief Justice. Judges were to come from England. It had civil and criminal jurisdiction over the British subjects and not Indian natives.
Defects of Regulating Act 1773
- The Governor-General had no veto power.
- It did not address the concerns of the Indian population who were paying revenue to the company.
- It did not stop corruption among the company officials.
- The Supreme Court’s powers were not well-defined.
- The parliamentary control that was sought in the activities of the company proved to be ineffective as there was no mechanism to study the reports sent by the Governor-General in Council.
Pitt’s India Act 1784
The act is named after William Pitt the Younger, Britain’s Prime Minister when the act was passed.
For political matters, Board of Control was created and for commercial affairs, the Court of Directors was appointed.
- The Board of Control took care of civil and military affairs. It comprised of 6 people:
- Secretary of State (Board President)
- Chancellor of the Exchequer
- Four Privy Councillors
- In this dual system of control, the company was represented by the Court of Directors and the British government by the Board of Control.
- The act mandated that all civil and military officers disclose their property in India and Britain within two months of their joining.
- The Governor-General’s council’s strength was reduced to three members. One of the three would be the Commander-in-Chief of the British Crown’s army in India.
- The Governor-General was given the right of veto.
- The Presidencies of Madras and Bombay became subordinate to the Bengal Presidency. In effect, Calcutta became the capital of the British possessions in India.
- This act made a distinction between the commercial and political activities of the East India Company.
- For the first time, the term ‘British possessions in India’ was used.
- This act gave the British government direct control over Indian administration.
- The Company became subordinate to the British government unlike as in the previous Regulating Act of 1773, where the government only sought to ‘regulate’ matters and not take over.
- This act established the British Crown’s authority in civil and military administration of its Indian territories. Commercial activities were still a monopoly of the Company.
The act was deemed a failure because there was no clarity on the boundaries between the company’s powers and the government’s authority.
The Charter Act Of 1793
The Charter Act of 1793, also known as the East India Company Act 1793 was passed in the British Parliament in which the company charter was renewed.
- This Act continued the company’s rule over the British territories in India.
- It continued the company’s trade monopoly in India for another 20 years.
- The Act established that “acquisition of sovereignty by the subjects of the Crown is on behalf of the Crown and not in its own right,” which clearly stated that the company’s political functions were on behalf of the British government.
- The company’s dividends were allowed to be raised to 10%.
- The Governor-General was given more powers. He could override his council’s decision under certain circumstances.
- He was also given authority over the governors of Madras and Bombay.
- When the Governor-General was present in Madras or Bombay, he would supersede in authority over the governors of Madras and Bombay.
- In the Governor-General’s absence from Bengal, he could appoint a Vice President from among the civilian members of his Council.
- The composition of the Board of Control changed. It was to have a President and two junior members, who were not necessarily members of the Privy Council.
- The salaries of the staff and the Board of Control were also now charged to the company.
- After all expenses, the company had to pay the British government Rs.5 Lakhs from the Indian revenue annually.
- Senior company officials were barred from leaving India without permission. If they did so, it would be considered as a resignation.
- The company was granted the authority to grant licenses to individuals and company employees to carry on trade in India. This was known as ‘privilege’ or ‘country trade’. This led to shipments of opium to China.
- This Act separated the revenue administration and the judiciary functions of the company leading to the disappearance of Maal Adalats (revenue courts).