Regulating Act of 1773: A Turning Point in British Governance

The Regulating Act of 1773 marked a significant milestone in the relationship between the East India Company and the British government. At this time, the East India Company was facing serious financial difficulties and had been plagued by corruption and favoritism among its officials in India. In response to these challenges, the British government passed the Regulating Act on June 10, 1773. This act was the first of its kind, outlining and formalizing the powers and responsibilities of the East India Company, particularly in relation to its territorial control in Bengal. This move aimed to bring much-needed control and oversight to the company’s operations.

Causes of Regulating Act of 1773

The Regulating Act of 1773 marked a significant turning point in shaping British governance in India. It was driven by several key factors that led to the reform of the East India Company’s policies and the regulation of its authority in India under British rule. These factors include:

The company’s financial situation was worsening, burdened by substantial debts.
Widespread corruption among the company’s employees was a growing concern.
Administrative challenges arose due to the existence of a dual government system.
Public sentiment in India turned strongly against the company.
The judicial system was inefficient and lacked proper administration.
There was no central authority to effectively oversee and guide the company’s operations.
Significant setbacks in 1769, such as the defeat by Haider Ali of Mysore, added to the company’s woes.
A devastating famine in Bengal resulted in a significant loss of life.
In 1772, the company sought a substantial loan of one million pounds to address its financial issues.

Defects of Regulating Act 1773

The major drawbacks of The Regulating Act of 1773 are stated below:

The Governor-General lacked the authority to veto decisions.
The Act failed to address the issues of Indian taxpayers.
It did not effectively combat corruption within the company’s ranks.
The powers of the Supreme Court remained vague.
The intended parliamentary oversight proved inefficient due to a lack of mechanisms for reviewing the Governor-General in Council’s reports.

Provisions of the Regulating Act

This historic act allowed the British East India Company to maintain control over its territorial holdings in India but placed certain regulations on its operations. It was known as the ‘Regulating Act’ because it didn’t completely take over authority.
The act introduced the position of a Governor-General, along with four Councillors, headquartered in Fort William, which is present-day Kolkata. Collectively, they were referred to as the Governor-General in Council.
Warren Hastings assumed the role of Governor-General for the Presidency of Fort William in accordance with this act.
The act also brought the Governors in Council of Madras and Bombay under the oversight of Bengal, especially in matters related to foreign policy. This meant they couldn’t engage in conflicts with Indian states without approval from Bengal.
The company directors were elected to serve five-year terms, with one-quarter of them retiring each year. Re-election was not allowed.
The act required the company directors to make their correspondence regarding revenue, civil affairs, and military matters with Indian authorities accessible to British authorities.
A significant development was the establishment of a Supreme Court of Judicature in Calcutta, with Sir Elijah Impey as its first Chief Justice. The judges for this court were brought in from England. This court had jurisdiction over civil and criminal matters involving British subjects, not Indian natives.

Background for passing the Act

In 1772, the financially troubled East India Company sought a substantial loan of 1 million pounds from the British government.
Widespread accusations of corruption and favoritism plagued company officials during this time.
Bengal was hit by a devastating famine that claimed countless lives, adding to the region’s woes.
The administration structure implemented by Robert Clive, known as the Dual system, generated numerous complaints. Under this system, the company held Diwani rights in Bengal (acquired after the Battle of Buxar), while the Nawab retained Nizamat rights (pertaining to judicial and policing authority) granted by the Mughal Emperor. In practice, both powers were concentrated in the company’s hands, neglecting the welfare of farmers and the general populace, with the company prioritizing revenue generation.
Lawlessness began to surge in Bengal, exacerbating the challenges faced by the local population.
The East India Company suffered a significant defeat at the hands of Mysore’s Hyder Ali in 1769.

Passing the Regulating Act of 1773

The Regulating act of 1773 had three main objects as;

To reform the constitution of the company.
To reform the Company’s Government in India.
To provide remedies against illegalities and oppressions committed by servants of the company in India.

Salient Features

Appointment of the Governor General and Council: In the days of the Regulating Act, a Governor General and four Councilors were chosen to lead the Presidency of Fort William in Calcutta.
Election for Directors: Instead of the directors being elected for just one year, they were now elected for five years. Every year, one-fourth of them retired, and those who retired couldn’t be elected again.
Decision by Majority Present: The Regulating Act specified the first Governor General and four Councillors. Warren Hastings, who served as the Governor of Calcutta, became the inaugural Governor General. They held office for five years, and the King had the authority to remove them earlier based on the Court of Directors’ recommendation.
Control over Correspondence: To assert Parliament’s control over the company, the directors were required to regularly share all their correspondence about civil and military matters in India with the Indian authorities. All revenue-related correspondence had to be submitted to the Treasury in England.
Extent of Governor General’s Power: The Governor General in Council was granted extensive authority to govern the company’s territorial holdings in India, manage the revenue of Bengal, Bihar, and Orissa, and oversee the civil and military administration of the Presidency town.
Bombay and Madras under the Control of Governor General: The presidencies of Bombay and Madras were placed under the control and supervision of the Governor General in Council when making decisions about war and peace. They were required to keep the Court of Directors fully informed about their activities and follow the Court’s orders and instructions.
Establishment of Supreme Court of Justice: The Regulating Act empowered the Crown to establish a Supreme Court of Judicature in Calcutta. This court had jurisdiction over civil, criminal, admiralty, equity, and ecclesiastical matters concerning British subjects, but it did not handle cases involving Indian natives. Over time, the Supreme Court did not fully exercise the powers granted by the Regulating Act of 1773.

The Regulating Act, initially intended to improve the situation for the people of India, ended up causing significant issues in the country’s justice system. This act led to clear conflicts between the executive and the judiciary, which were apparent to both Indians and the British Parliament. Instead of bringing about the intended positive changes in Indian administration, the Regulating Act created conflicts and disparities among the Company’s own servants.