Dr.

Ram Manohar Lohia

National Law
University ,Lucknow, U.P.

History-III

Regulating Act of 1773 : its merits and demerits

(Final Draft)

Submitted to: Submitted By:

Dr. Vandana Singh Uttkarsh Ranjan

Rao

Associate .Prof.( History) Roll no. 164(III rd

Semester)
1
 Acknowledgement

It is not a ritual but a heartfelt feeling that I wish to express my gratitude. If I attempt

to express my thanks to my teacher Dr. Vandana Singh in words it would be in vain

because the debt is non-repayable and it is only a mute acknowledgement that I can

offer. This project would have been impossible without her guidance and valuable

suggestions.

Index

The regulating act

Condition prior to the act
Causes of the regulating act
The regulating act : objective
Provision of act
Supreme court under regulating act
Merit and demerit under act
Conclusion
The Regulating Act of India 1773

Regulating Act, 1773 was the First Parliamentary Ratification, Codification,

Confirmation, Justification or Authorization defining the Powers and Responsibilities

of the Various Organs of the East India Company including its territorial control over

Bengal. The Regulating Act was passed in the British House of Commons on 10 June

in 1773 in response to severe financial crisis within and public humiliation

surrounding the East India Company. Generally The British Regulating Act can be

considered as the initial Endorsement of the British government into the control of

the Indian Subcontinent. Regulating Act of 1773 was the first landmark in the

constitutional development of India. Via this act, the British Parliament for the first

time interfered into affairs of India. The Prime Minister of England at the time of

Regulating Act of 1773 was Lord North

By 1773 the East India Company was in dire financial constrains or crisis asking for

assistance from the British Government. Faced with corruption and nepotism or

partiality amongst the company officials in India, the British Government enacted the

Regulating Act on 10 June in 1773 to control the activities of the East India

Company. The Act set up a system whereby it supervised (regulated) the work of the

East India Company but did not take power for itself. Passing the Act, the British

government decided within a few years to take a more active role in the affairs of the
company. According to V.D. Kulshrestha, “Through the Regulating Act the British

Parliament got an opportunity to tighten its stronghold on the Company’s affairs.

Conditions prior to the act of 1773

The conditions or the state of places like Bihar, Bengal and Orissa was the main
reason for which the regulating act was passed; these places were under chaos,
confusion and disturbance because of the misuse of powers by the company servants
and other such reasons. To counter all these problems the British parliament decided
to pass an act with provisions which could later solve the problems and this act was
the Regulating Act of 1773. The conditions can be put under 3 main points, namely:

(a) Misuse Of Powers By The Company’s Officials: after the battles of Plassey
(1757) and Buxar (1764), the company established military supremacy over the areas
of Bihar, Bengal and Orissa, because they captured or took control over the Diwani
and the Nizamat. This bought a great deal of confusion and anarchy in these places
and the company’s servants were given to their obsession for wealth. Corruption was
widespread among them and they exploited the people to amass huge fortune for
themselves so that they can return to England quickly.# and when they returned back
to England they participated in politics and with their illegal money they used to get
the/ purchase the seat in House of Commons. This vulgar display of the display of
wealth earned them the nickname of „nabobs‟. Thus this clearly distinguished the
fact that the company servants used to exploit the poor Indians and used to run away
to use this illegal wealth looted by them.

(b) The Company’s Political Ambitions: the British parliament realized that the
company’s motives had started to change from a mere commercial basis and started
to come to the political arena, and at this point of time the parliament in Britain
thought that the company should not have any political powers because they have
zero experience and they just have knowledge about how to trade. The mess that they
made in Bengal and other places surrounding it was all the more reason for the
British parliament to pass the regulating act of 1773.

(c) Apprehensions about The Company’s Financial Position: while the company’s
servants were getting rich the company was getting poor and was getting under
financial crisis. The spirit of bargaining with the company started by an act of 1767
under which the British parliament granted the company to acquire territory on a
condition that a sum of 400,000 pounds per year
will be paid by the company to the crown. The parliament’s demand increased and
the company fell into debts, and thus came the need to check the money matters.
(d) Condemnatory Reports by parliamentary committees: the house of commons
appointed two parliamentary committees, namely, a select committee and a secret
committee to study the state of company in India# and the reports were always very
condemnatory and thus the parliament thought the company could no longer take
charge of its activities alone in India and thus it finally decided to interfere.

Other than these the Main Objectives of the bill were as follows: (i) reform the
constitution of the company, (ii) to reform the company’s government in India, and
(iii) to and provide remedies against illegalities and oppressions committed by the
servants of the company in India. Accordingly, the regulating act of 1773 changed
the back bone of the present situation and altered the structure of the government.
The bill was finally passed by an overwhelming majority in the House of Commons
on June 11 1773 and subsequently at the House of Lords and received the royal
assent on June 21, 1773.

CAUSES OF THE REGULATING ACT 1773:

Constitutional anomaly arising due to the system of dual government: With the
acquisition of the territories in Bengal the Company’s position has been altered and it
is no longer remained a mere trading organization but emerged as a territorial power.
It had succeeded in establishing a de facto government in Bengal, Bihar and Orissa.
But the emergence of the company from a trading body to a territorial power placed
it in a peculiar position from the constitutional standpoint. According to English law,
no British subjects could possess territory except in the name of the Crown. It
therefore followed that either the territorial acquisitions by the company in India
were to be taken possessions of by the crown or the company would left to be free
with its powers and privileges and powers. Both these options did not seem feasible,
firstly because it involved the risk of antagonizing the other European nations and
secondly, the company’s misrule in India was likely to tarnish the name of British
Empire.
Abuse of privileges by the Company’s servants: As a result of the battles of
Plassey (1757) and Buxar (1764), the Company acquired the Diwani and the
Nizamat, thus establishing its military supremacy in the regions of Bengal, Bihar and
Orissa. The area was gripped with anarchy and confusion, and the company‟s
servants were given to their obsession for wealth.
Corruption was widespread among them, and they exploited the people in order to
amass huge fortunes for themselves so that they could return quickly to England.
When they went back to Britain they dabbled in politics, and with their ill-gotten
wealth they purchased seats in the
House of Commons. This vulgar display of wealth earned them the nickname of
„Nabobs‟. They also bought stock in the Company, seeking to influence its policies.

The Company’s political ambitions: The British politicians realized that the
Company’s interests in India were no longer merely commercial, and that it had
assumed the character of a political and territorial power. It was being increasingly
realized that the Company should not be left alone outside the sphere of
Parliamentary control, especially as the Company servants specialized in commerce
and had no training or experience in handling political and legal situations at all. The
mess they made in Bengal and the surrounding region was living proof of this fact.
Public opinion in England was thus crystallizing in favor of Parliamentary
intervention in the Company’s affairs.

Apprehensions about the Company’s financial position: While the Company’s

servants were getting richer, the Company itself was falling into financial
embarrassments. The directors of the company voted increased dividends to
shareholders, but to meet the rising demand for Company shares, the Company had
to approach the British Parliament for a loan. The Company was already bound to
pay the British Exchequer an annual tribute of £400,000 as ‟share in the Indian
spoil‟. The news of the Bengal famine and other things had already reached the
Parliament, and granting this loan to the Company without first probing into the
causes for its dismal state of affairs was impossible.
Condemnatory reports by appointed committees: The House of Commons
appointed a Select

Committee and a Secret Committee to study and report the deficiencies in the
Company’s management of the Indian Territory. The reports were condemnatory in
every way, and it became exceedingly clear that the Company could no longer
function as an independent body, but must be subordinated to the Parliament.
Consequently, the British Parliament enacted the Regulating Act of 1773. By this Act
the constitution of the Company was modified, and it was to some extent subjected to
the control of the British Government and Parliament. The government at Calcutta
was reorganized, and a Supreme Court was set up at Calcutta. The Regulating Act
was the first instance of Parliamentary intervention in the Company’s affairs, and
henceforth Parliamentary Acts replaced the Royal Charters. The Regulating Act,
1773 suffered from various defects, but even as it sought to remove the evils of the
Company’s rule, it proved to be a landmark achievement in the Constitutional history
of India.

THE REGULATING ACT OF 1773

OBJECTIVES OF THE ACT

1. To bring the management of the company under the control of British parliament
and British crown.

2. To introduce reforms in the company’s constitution at home, ie in England

3. To bring about reformation of the company’s government in India;

4. To provide adequate remedies against the atrocities and oppressions committed by

the servants of the company in India.

5. address the problem of dual system of governance instituted by Lord Clive

6. to control the company, which had morphed from a business entity to a semi-
sovereign political entity.

The Provisions Stated in the Act of 1773

The provisions of the regulating act or the salient features of the regulating act were
only to impose control of the company in India as well as England. The provisions or
the features can be listed as follows:

(a) Change in the constitution of the company: The first measure taken under the
act was to change the method of appointment and retirement of the directors of the
company in England with a view to tighten up its control over the affairs of the
company in India. Hitherto twenty – four directors were elected annually by the
general court of shareholders of the company. But under the regulating act , their
tenure was to last for four years and one – fourth ie six of them were to be retire
every year by rotation . The voting power was restricted only to those shareholders
who had a stock of 1000 pounds instead of 500 pounds These changes were intended
to improve the quality of the general court of shareholders and confers stability to the
board of directors of the company by raising their tenure from one to four years.
(b) Election for directors: the directors of the company were elected for a period of
4 years, one-fourth of them were to retire every year and the retiring directors were
not entitled to be elected again. Kaye nicely pointed out that “the effect of this
provision was to secure stability and continuity in the policy of directors.”

(c) Governor-general and the council: instead of a governor and council, a

governor-general and council was appointed. The decisions of the council were taken
by a majority.

(d) Powers of the duties and duties of the council: the presidencies of Bengal,
Bihar and Orissa were under the control of the governor-general and council, all the
military and territorial powers were vested in them and along with that they also had
the power over commerce and trading arena.

(e) Establishment of supreme court: the act had a special section for the
establishment of Supreme Court I.e. section 13 of the act and it had all the provisions
for the establishment of a supreme court authorized by the king George II.
 (f) Control over Madras and Bombay: the presidencies of Bengal and madras
were under the

control of the governor-general and council for reducing the existing state of
confusion and chaos present in those states due to the corruption by company’s
servants and their misuse of power.

(g) Legislative power of the council: The Governor General and Council could
make any rules and regulations in case of breach of duty and any rules to disturb the
good governance and reasonable order in the society, however the rules and
regulations must be subject to some conditions such as (i) the rules and regulations
made must not be repugnant to the laws of England, (ii) they were not valid and
effective unless registered and published in the supreme court, (iii) the rules and
regulations or ordinances could be set aside or rejected by the king-in-council on an
application presented to the supreme court within sixty days of registration and
finally the last condition (iv) the governor-general and the council had to submit the
copies of the
rules, regulations and ordinances to the secretary of the state of England. The king
could disagree with the law but if he did not within 2 years the law was accepted.

(h) Reorganization of the company’s government of Bengal: The regulating act

introduced certain changes in the organization and powers of the government of
presidencies of Calcutta and Diwani provinces of Bengal, Bihar and Orissa. After the
battle of Plassey in 1756 , Calcutta was regarded as British settlement and the
sovereignty vested with the British crown . But as rightly observed by Prof. M.P Jain
“the Mofussil areas of Bengal, Bihar and Orissa had not yet became
British territories as the company , though de facto supreme was de jure Diwan”.
Therefore unlike the inhabitants of Calcutta, who were treated as British subjects, the
inhabitants of the territory of Bengal, Bihar and Orissa were regarded as the subjects
of Moghul emperor and not of the British crown. The regulating act provide for the
appointment of a governor-general and four counselors for the civil and military
government of the presidency of Calcutta. They were also to manage and govern the
Diwani province of Bengal Bihar and Orissa. Thus the governor of Bengal was
designated as governor-general of Bengal .for a period of the governor general and
members of Council were to be appointed for a period of five years but they could
not be removed earlier by British crown. A casual vacancy in the office of the
governor general was to be filled by the company with the consent of the British
crown. The regulating act provided that the presidencies of Bombay and madras were
to be held under the control of the governor – general and Council at Calcutta in
matters of war, treaties and peace1. However there were two exceptions when the
presidencies of Bombay and madras could commence war or make treaty of peace
without the consent and approval of the governor-general and council of Calcutta
.They were (i) in case of imminent necessity (ii) having received special orders from
the court of directors in this regard. The subordinate presidencies of Bombay and
madras were to transmit regularly the information on all matters relating to
government, revenues or interest of the company to the governor –general and
council. The governor-general and council, on their part , were required to transmit
the information regarding their activities affecting the interests of the company to the
court of director in England.

Miscellaneous provisions- the act also provided provisions to control or to

check the flagrant abuses very prevalent at the time of the machinery in India. The
governor-general and the members of the council, judges of the Supreme Court and
the officers engaged in the collection of revenue were prohibited from receiving
presents or engaging in private trade. The court of King’s Bench in England was
empowered to punish offences, crimes or misdemeanors committed against the king-
in-council.
 Supreme Court at Calcutta

Charter of the Supreme Court:

The regulating act of 1773 superseded the charter of 1753 and thereby empowered
the crown or the British government to establish a supreme court. The section 13 of
the charter, authorized by the king George II issued letters patent for establishing a
supreme court of judicature at fort Williams, on 26th march 1774.

The charter of 1774 established the jurisdiction of the Supreme Court, the supreme
court had the following jurisdiction:

(i) Civil Jurisdiction(ii) Equity jurisdiction (iii) Criminal jurisdiction(iv)

Ecclesiastical jurisdiction(v) Admiralty Jurisdiction.

(i) Civil Jurisdiction- the Supreme Court had 2 types of civil jurisdiction and they
were distributed according to the presidencies ways that is the powers of Supreme
Court regarding Calcutta were territorial and therefore civil matters regarding it fell
within the ambit of Supreme Court. Whereas the areas beyond the presidency limits
were only under personal civil jurisdiction of the Supreme Court. Therefore, a suit
could be filed in the Supreme Court against
the following categories of persons, irrespective of the location of the cause of
action. The
categories were:

(a) The East India Company

(b) The mayor and the alderman of Calcutta

(c) Any of his majesty’s subjects who resided or held any property within the
provinces of
Bengal, Bihar or Orissa.

In all the above categories the Supreme Court has original jurisdiction.

(ii) Equity Jurisdiction- the Supreme Court and the high court of chancery in Great
Britain had the same jurisdiction

(iii) Criminal Jurisdiction- the Supreme Court extended this power of it‟s to the
Britishers and the servants of the company living in the Calcutta, Bengal, Bihar and
Orissa. The Indians or the natives were exempted from this jurisdiction. The
Supreme Court had no jurisdiction over the governor-general and the council except
in the cases of the treason or felony.

(iv) Ecclesiastical jurisdiction- the Supreme Court had the same jurisdiction over
British subjects in India as the ecclesiastical courts in England at that time. In that
capacity the Supreme Court functioned as a court of testamentary and probate
jurisdiction. It also appointed guardians and keepers for infants and lunatics
properties.

(v) Admiralty Jurisdiction- the Supreme Court had the admiralty jurisdiction in all
cases civil and maritime and also in all the maritime cases committed on high seas at
that time.

The Supreme Court was empowered to superintend the court of collector, the quarter
sessions and the court of requests and was empowered to issue writs of certiorari,
mandamus, error or procedendo. Thus the supreme court of Calcutta was granted the
widest jurisdiction and many important powers.
 Merits and Demerits of regulating act

Since establishment of supreme court is biggest achievement of regulating

act,1773 .The first judge of the Supreme Court was Sir Elijah Impey and John Hyde,
Robert Chambers and Le Maistre were the first pusine judges of the supreme court.

The Supreme Court was regarded as an improvement over the judicial system
prevailing in England. The merits of the provisions of the regulating act were:

(a) Establishment of Supreme Court of Justice: Section 13 of the Regulating Act

has empowered the Crown to establish a Supreme Court of Judicature at Fort
William in Calcutta. The Supreme Court was presided by the first Chief Justice
Sir Elijah Impey and four other puisne judges who were barristers from England.
The Supreme Court exercised civil, criminal, admiralty, equity and ecclesiastical
jurisdiction over British Subjects and were not authorized to try matters
pertaining to the Indian natives. However, as time passed the Supreme Court did
not exercise its powers as enumerated under the Regulating Act 1773 which can
be seen from the very famous cases of trial of Nand Kumar , the Patna Case, the
Commaluddin case and the Cossijura Case which paved the way for passing of
Act of Settlement in 1781, limiting the powers of the Supreme Court at large.

(b) It substituted a court of king’s judges and professional men of the law for a court
composed of company’s servants who were removable by the company’s servants.

(C) The significance of the Regulating Act is that it brought the affairs of the
Company under the control of the Parliament. Besides, it proved that the Parliament
of England was concerned about the welfare of Indians.
(D) The greatest merit of this Act is that it put an end to the arbitrary rule of the
Company and provided a framework for all future enactments relating to the
governing of India.

Though the aims and objectives of the makers of the regulating act was very
good and was for the benefit of the people and the company, many defects came
to light subsequently. Some of the defects can be listed down:
The object of the regulating act was good, but system that it established was
imperfect. The act was a medley of inconstancies with numerous deficiencies.
(a) the act rendered the Governor General powerless before his colleagues because
he had no veto power. This brought difficult times for Warren Hastings. He was
outvoted and overruled for most of the times by the members of his council. Further,
come of the members were hostile towards Warren Hastings.

(b) the provisions regarding the Supreme Court at Fort Williams were vague and
defective. The law did not mention anything regarding the jurisdiction of the
Supreme Court. It also did not demarcate the lines between powers of Governor and
Supreme Court. The actions of the servants of the company were brought under the
Supreme Court but this again tussle between Governor General and the court.

(c)the presidencies of Bombay and Madras continued to act on their discretion on

pretext of emergencies. They also continued wars and alliances without caring in the
least bit to Presidency of Bengal. Fourthly, the parliamentary control ineffective in
the sense that there was no concrete arrangements to study and scrutinized the reports
sent by Governor General in council.
(d) there was nothing in the act which could address the people of India, who were
paying revenue to the company but now were dying in starvation in Bengal, Bihar
and Orissa.

(e) The main defect of the Act was that the Governor-General was made powerless
because the council which was given supreme power often created deadlocks by
over-ruling his decision. However, many of these defects were rectified by the Pitt’s
India Act of 1784. Some of defect which is in judicial system at that time are
given below-
1. Relationship between the supreme court and the governor general and council- it
was very ambiguous and because of the ambiguity the supreme court and the
governor general and council were at logger heads.

2. The relationship between the Supreme Court and the company’s court in the
moffussil area was also not very clear, there was confusion on the part where whether
the Supreme Court can issue writs and entertain appeal or vice-versa.

3. The jurisdiction of the Supreme Court was not very clear with respect to the outer
limits of the presidency limits.

4. Position of natives living outside the presidency limits was also not clear. Whether
they will be governed by the English law or by their own law was not clear.

5. The act did not make any clear provisions regarding about the law which the
supreme court had to apply in the proceedings before it. Although it applied English
law but still it was not clear about the extent of its application.

Conclusion
From the aforementioned discussions it is to be said the Regulating Act although

passed for the benefit of natives residing in India proved to be fatal for the whole

administration of justice in India as the conflicts between the executive and the

judiciary was visible not only to the Indians but also to the British Parliament. Thus,

the Regulating Act rather than bringing far reaching changes in Indian

administration, brought about conflicts and disparities amongst the servants of the

Company itself. Though regulating act is too good for British administration but

there is some loopholes also in it .these drawback was ratified in pitt’s india act.
 Bibliography.

1. Jain, M. P. , “Indian Constitutional Law”, 6th ed. Lexis Nexis:

Nagpur,
2010.
2. www.wikipedia.com/regulating_act.
3. www.cyberessays.com
4. Shukla, V. N. “Constitution of India”, 11th ed. Eastern Book
Company:
Lucknow, 2008.
5. https://www.britannica.com/topic/Regulating-Act

6.http://www.gktoday.in/regulating-act

7. https://ilchslcu.wordpress.com/2015/08/24/regulating-act-1773/