1773 act

Administration of East India Company at the time of Regulating Act of 1773 Before we delve into the details of the act, lets understand how the East India Company was managed at that time. Administration of the East India Company in England was managed by a body of 24 directors called Court of Directors. This Court of Directors was elected by shareholders of the company on annual basis. The collective body of these shareholders was called Court of Proprietors. The day to day functioning of the East India Company were done by the committees of the Court of Directors. In India, three presidencies were established at Bombay, Madras and Kolkata under a President called Governor General and his Council or Governor in-council. All the powers were lodged into the Governor-in-Council and nothing could be transacted without the majority of the votes in the council. These presidencies were independent of each other and each of them was an absolute government in its own limits, only responsible to the Court of Directors in England. Circumstances that led to Regulating Act 1773 The battle of Plassey (1757) and the Battle of Buxar (1764-65) led to firm establishment of territorial dominance of East India Company in India. At that time, their territories in the country included parts of current states of Maharashtra, Gujarat, Goa, Karnataka, Tamil Nadu, Orissa, West Bengal, Bihar and Uttar Pradesh. With these two important wars, the Nawab of Awadh became their ally while Mughal emperor Shah Alam became their pensioner. Bengal and Bihar came under the dual system of administration of Clive whereby company got Diwani rights or the Fiscal administration rights while Nizamat (territorial) jurisdiction was with the puppet nawabs. However, this system had various problems which ultimately led to the Regulating Act 1773. These are as follows: This system not only created confusion but also left the people hapless against oppression by both company and nawabs. The British parliament could not remain a mute spectator and thus regulation of the trading company was necessitated. The servants of the company had become corrupt. Many of them retired and took away heaps of wealth to England and lived like Indian Nawabs, thus correctly nicknamed “English Nawabs” in England. In 1772, a secret parliamentary committee reported that the servants of the company including Clive had received large sums, Jagirs etc. The corruption was so much prevalent that the servants of the company led it on the brink of financial bankruptcy in early 1770s. Further, the famine of 1770 also reduced the revenue. In August 1772, the East India Company applied for a loan of One Million Pounds to the British government. This was enough for the parliament to grab the opportunity, cross examine the doings of the company and its officials and then enact a legislation to regulate its affairs. Objectives of the Act The key objectives of the Regulating Act of 1773 included – addressing the problem of management of company in India; address the problem of dual system of governance instituted by Lord Clive; to control the company, which had morphed from a business entity to a semi-sovereign political entity. Key Provisions Creation of Office of Governor of the Presidency of Fort William The presidencies of Bombay and Madras were made subordinate to the Presidency of Calcutta. The Governor of Bengal was designated the Governor of the Presidency of Fort William and he was to serve as Governor General of all British Territories in India. This Governor General was to be assisted by an executive council of four members. As per the act, Office of the Governor-General of the Presidency of Fort William was created in 1773, and on 20 October 1773, Warren Hastings became the first Governor General of India. The members of the council were Lt. General John Clavering, George Monson, Richard Barwell and Philip Francis. These members could be removed only by the British Monarch (King or Queen) on representation from Court of Directors. Difference between Governor General and Viceroy Commonly we call Warren Hastings as First Governor General of India. But the official title of Warren Hastings was the Governor of the Presidency of Fort William. This office became Governor General of India in 1833 from the times of Lord William Bentinck and in 1858, when India was taken over by England; it remained Viceroy and Governor-General of India till 1947. Governors-in-Council of Bombay and Madras were required to pay due obedience to the orders of Governor -General of Bengal. Governor-General in council was given power to make rules, ordinances and regulations. These rules and regulations were required to be registered with the Supremes court and could be dissolved by the king-in council within 2 years. Changes in voting qualifications This act raised the qualifications for a vote in the Court of proprietors from £ 500 to £ 1000. Further, instead of the annual elections, the act provided the directors to hold office for four years and a quarter of the number of being annually re-elected. The Directors were required to submit copies of letters and advices received from the Governor-General in council. Establishment of Supreme Court at Calcutta The regulating act provided for establishment of a Supreme Court of Judicature at Fort William comprising one chief justice and three other judges. Sir Elijah Imphey was appointed as chief justice of this court. It had power to try civil, criminal, admiralty cases and it had to be a Court of Record. It was given supreme judiciary over all British subjects including the provinces of Bengal, Bihar and Orissa. The Supreme Court was also made to consider and respect the religious and social customs of the Indians. Appeals could be taken from the provincial courts to the Governor-General-in-Council and from there to King-in-Council. Increased control over company East India Company was kept under the Control of the King of England. The system of nominating high officials of the Company, Judges, Member of the Court of Directors started. The court of directors was also required to report on company’s revenue, civil, and military affairs in India. The act prohibited receiving of presents and bribes by the servants of the company. No British subject was to charge interest at a rate higher than 12 per cent. The Act also settled the salaries of the Governor General, Governors, chief justice and other judges. Importance of the Regulating Act The Act of 1773 recognized the political functions of the company, because it asserted for the first time right of the parliament to dictate the form of government. It was the first attempt of British government to centralize the administrative machinery in India. The act set up a written constitution for the British possession in India in place of arbitrary rule of the company. A system was introduced to prevent the Governor-General from becoming autocratic. This act unequivocally established the supremacy of the Presidency of Bengal over the others. In matters of foreign policy, the Regulating Act of 1773 made the presidencies of Bombay and Madras, subordinate to the Governor General and his council. Now, no other presidency could give orders for commencing hostilities with the Indian Princes, declare a war or negotiate a treaty. It established a supreme court at Fort William, Calcutta and India’s modern

By 1773, the East India Company was in dire financial straits.[2] The Company was important to the British Empire because it was a monopoly trading company in India and in the east and many influential people were shareholders. The Company paid GB£400,000 (present-day (2017) equivalent is £NaN) annually to the government to maintain the monopoly but had been unable to meet its commitments since 1768 because of the loss of tea sales to America. About 85% of all the tea in America was smuggled Dutch tea. The East India Company owed money to both the Bank of England and the government: it had 15 million lbs (6.8 million kg) of tea rotting in British warehouses and more en route from India.

Lord North decided to overhaul the management of the East India Company with the Regulating Act. This was the first step to the eventual government control of India. The Act set up a system whereby it supervised (regulated) the work of the East India Company.

The Company had taken over large areas of India for trading purposes and had an army to protect its interests. Company men were not trained to govern so North's government began moves towards government control since India was of national importance. Shareholders in the Company opposed the Act. The East India Company was still a powerful lobbying group in Parliament in spite of its financial problem