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Beginning of Constitutional Development in India – Regulating Act 1773, Objectives, Merits and Demerits, Regulating Act 1773

         On 12 August 1765, Clive received a farman from the incumbent Mughal emperor Shah Alam II. According to this decree, the company got the Diwani of Bengal, Bihar and Orissa and in return the company was to pay 26 lakh rupees annually to the Mughal emperor. Similarly, the Nawab of Bengal was now only a pensioner of the Company and the Company used to give him 53 lakh rupees annually which was later reduced to 32 lakh. Clive took the civil work in his hand and put the work of Nizamat on the shoulder of the Nawab. Thus Clive imposed a dual system of government in Bengal which ruined Bengal. Clive appointed Muhammad Raza Khan as Deputy Diwan for Bengal and Raja Shitab Rai for Bihar for civil duties. Clive hoped that this arrangement would benefit the company, but within a few days the company started going into losses. Thus the debt burden on the company increased. To overcome this, the Regulating Act 1773 was brought in.


Regulating Act 1773

 Reasons responsible for passing the Regulating Act

The following reasons were responsible for the coming into force of the Regulating Act 1773–

  • The chaos resulting from the dual government system of Bengal.
  • Profits from private trade by officers and employees of the East India Company
  • The company sought an exemption from the £400,000 annuity they had to pay to the English government to overcome their deteriorating financial situation. This exposed the financial position of the company.
  • The company, concealing the actual position of its financial position, showed a dividend of 12.5 per cent in 1772 even though it had a debt of 60 lakh pounds.
  • In order to improve the financial condition of the company, the directors of the company asked for a loan of ten million pounds from the ‘Bank of England’.
  • The Prime Minister of England, Lord North, sent this loan application for the approval of Parliament.
  • Parliament appointed a select committee to investigate it.
  • The chairman of the select committee was General Bargayan, speaking on this controversy, he said —-

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       The great tyranny and cruelty that can stain the name of a civilian government needs to be rectified…..and if for some reason sovereignty and trade are not separated, both India and England will fall so low And they will drown that they will not be able to be resurrected.

       The company’s directors, whose conduct was already suspected by the home government and the people of England, and this suspicion was further strengthened when in 1772 the company’s directors showed a profit of 12.5 percent and in the same year the company asked for a loan of one million pounds. This discrepancy was so strong that a second ‘secret committee’ of the House of Commons had to be appointed to find out the truth. A company whose officers return to England richly and that company becomes insolvent.

    The following year the committee submitted its inquiry report in which several defects were found in the company. Recommended to give a loan of 14 lakh pounds to the company at an interest rate of 4 percent with certain conditions. The Regulating Act was passed by another Act. The bill was strongly opposed by the company and its business friends.

Provisions of the Regulating Act 1773

 By the act, changes were brought in the constitution of the company in both India and England, which were as follows:

1- In England the right to vote in the Court of Proprietors was given only to those people who owned one thousand pounds of shares in the company at least one year before the election.

2- The Court of Directors will be elected for four years and the number of directors has been fixed at 24, out of which 25 percent will take leave every year.

3- It was ordered to the directors that they would submit all correspondence related to military and civil administration before the ‘Finance Department, India Administration and Revenue (Secretary of State). Thus, for the first time, the British Parliament was given the right to control Indian affairs, although this power was limited.

4- A Board of Administration (Council) was formed in Bengal in which the Governor-General (President) and four members (Councillors) were appointed. Decisions in this Board were made by majority vote and the vote of the Speaker would be decisive only in case of an equality of votes. The quorum or quorum was of three.

5- This circle had the first Governor-General (Warren Hastings) and Councilors (Philip Francis, Clavering, Monson and Burwell).
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6- The councilors were appointed for 5 years and could only be removed by the British Parliament on the recommendation of the Court of Directors.

7- The Governor-General in Council was given the authority of military and civilian administration of the Presidency of Fort William in Bengal and was also to “superintend the Presidencies of Madras and Bombay in certain special matters.”

8- A Supreme Court was established by the order of the emperor, in this court a Chief Justice and three other minor judges were appointed.

9- All the workers of the company, and all the people of Bengal had the right of appeal under this court. All cases were decided by judicial methods prevalent in England. Although no clear legislation was made in this regard.

10- The Supreme Court was constituted in Calcutta in 1774 and ‘Sir Elijah Impey’ was made Chief Justice, with Chambers, Lemester and Hyde appointed as minor judges.

11- All military or civilian officers related to the company were prohibited from accepting gifts, donations, prizes etc. in any form.

12- The salaries of the workers of the company were increased. The governor-general was paid £25,000, councilors £10,000, the chief justice £8,000, and petty judges £6,000 annually, possibly the highest salary in the world at the time.

13- The Governor of Bengal was made the Governor General of Bengal. Thus Warren Hastings was the last governor of Bengal and the first governor general.

Defects of the Regulating Act of 1773

  • Instead of making the decision of the Governor General himself, he was made dependent on the councilors’ committee which always turned against him.
  • The rules of the Supreme Court did not clearly mention whether justice was to be done half-made by British law or Indian.
  • The jurisdiction of the Calcutta Council and the Court was not fixed.
  • The Act did not attempt to firmly establish the sovereignty of the British Crown.
  • Bengal was not taken under direct control.
  • This Act did not give full and explicit control to the Government over the Company, the Directors over its servants, the Governor-General over its Council or the Presidency of Calcutta over Madras or Bombay.
  • This act was based on the policy of checks and balances.

    Due to the defects of this act, quarrels started between the Govarna-general and his council. There were irregularities in the Supreme Court and other courts of Bengal. The implementation of the law made by the Governor-General and his Council in the court was up to the court’s own wish. The Governor-General was not given full authority over other presidencies. So this system quickly disintegrated.

 Properties of the Regulating Act of 1773

    This act made the first attempt to administer constitutionally, which was the first attempt of any European country to administer it in the country of a remote-civilized people.
    An attempt was made by this act to establish an honest and efficient sovereignty in Bengal, Madras and Bombay.
    The Supreme Court was established to stop the autocracy of the officers of the company.

    Thus it can be said that this act was an attempt to establish better administration, but due to incomplete knowledge of the problems, this act failed and instead of easing the problems of Warren Hastings, it increased.

      The Regulating Act lasted 11 years and to overcome its shortcomings, the Pitts India Act was passed in 1784. Only Warren Hastings acted under this act.

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