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REGULATING ACT OF 1773
About Act of 1773
- Formally called East India Company Act 1772
- Lord North was the then British PM
- It did not completely take over power from East India Company(EIC), hence called ‘regulating’
- It was the first landmark law with respect to Indian constitutional development
Why Passed
- By 1773 EIC was in a very bad financial crisis
- EIC had defaulted annual payments to Crown (payments were made to maintain trade monopoly)
- This was primarily because of losses suffered in tea sales to America
- 85% tea that traveled to America was actually smuggled Dutch tea
- Tea Act 1773
- It was then passed to reduce massive amount of tea held in London warehouses by EIC
- It helped EIC financially
- 1772 – EIC sought loan of 1 million pounds from Crown
- Corruption and nepotism prevailed in EIC
- Bengal Famine caused further trouble
- Complex Dual form of administration instituted by Robert Clive in Bengal drew lot of complaints
- EIC – had Diwani rights ( Revenue)
- Nawab – had Nizamat rights (Judicial + Police)
- But in reality, both powers were with EIC
- Farmer, people welfare was neglected over maximizing revenue
- Lawlessness increased in Bengal
- 1769 – Hyder Ali defeated EIC
Imp Points
- First Time
- First Step by Crown to control EIC
- First time gave recognition to Political & Administrative functions of EIC
- Laid Foundation for Centralised Administration of India
- Features
- Governor of Bengal & Supreme Council
- Created post of Governor-General of Presidency of Fort William & so Governor was now called Governor-General of Bengal
- 1st Governor-General of Bengal : Warren Hastings
- 4 Councilors to assist Governor-General ->jointly called -> Supreme Council of Bengal or Governor-General Council
- Only Crown had powers to remove members of Governor-General Council
- Decisions of council were decided by majority
- Military Chief was also included in the council sometimes
- First Supreme Council
- Governor-General : Warren Hastings
- 4 members
- Lt-Gen John Clavering
- George Monson
- Richard Barwell
- Philip Francis
- Governors of Bombay & Madras
- were made subordinate to Governor General of Bengal
- earlier they were independent presidencies
- Supreme court
- A Supreme Court was established at Fort William – 1774
- 1 Chief Justice , 3 Judges
- First Chief Justice – Elijah Impey
- Only British Judges served
- EIC Servants Private Trade
- Ended with this Act
- EIC servants could no longer accept presents and bribes from natives
- EIC Court of Directors
- They had to now report on Revenue, Civil & Military
- Limited Company dividends to 6% until it repaid a £1.5m loan (passed by an accompanying act)
- Restricted Court of Directors to 4-year term
- 1/4th to retire every year
- No Re-election allowed
- Governor of Bengal & Supreme Council
Drawbacks
- Governor-General had no veto power in council
- The Act didn’t address concerns of Indians
- The Act failed to check corruption in EIC
- Powers of Supreme Court were not well defined
- Parliamentary control of EIC activities proved ineffective and the reports of Supreme Council were neglected