The Regulating Act (1773)

• The Regulating Act was the first significant milestone in India’s constitutional development.

• Lord Clive obtained the Diwani of Bengal, Bihar, and Orissa from Shah Alam, the Mughal Emperor, in 1765.

• Shareholders demanded larger dividends, which were raised to 121%, while the British Government received £4 million annually from 1767 onwards.

• Edmund Burke condemned the British Government for sanctioning bloodshed and extortion in exchange for £4 million.

• The situation of the people of Bengal worsened as they became victims of famine and corruption by the servants of the Company.

• According to Lecky, the natives experienced an unprecedented tyranny, with entire districts depopulated and panic-stricken villagers fleeing upon the arrival of English merchants.

• Chatham described the inequities in India as so rank they “smell to earth and heaven.”

• In April 1772, a Select Committee of 31 members was appointed to inquire into the affairs of the East India Company.

• In August 1772, the East India Company requested a loan from the British Government, prompting Parliament to appoint another Select Committee to investigate its affairs.

• The committee submitted its final report in May 1773, leading to the passing of the Regulating Act of 1773.

• Several factors contributed to the passing of the Act, including educated public opinion in England through the press and parliamentary discussions.

• The abuses of the Company’s rule in India and the rise of the ‘Nabobs’ seeking to dominate English society fueled this public opinion.

• The British country-gentry despised the ‘Nabobs’ and felt jealous of them, adding to the demand for regulation.

• Rival parliamentary interests clashed over India, particularly regarding the rise and fall of ministries reliant on the support of the Directors of the East India Company, who had political influence in the House of Commons.

• State regulation and control between 1773-1784 were primarily driven by political manipulation.

Provisions of the Regulating Act

• The Regulating Act granted voting rights to shareholders holding stock worth £1,000 for 12 months preceding the election date for the Directors of the Company.

• Directors were previously elected for one year, but the Act extended their tenure to 4 years, with one-fourth of them retiring every year.

• Directors were required to submit copies of letters received from the Governor-General-in-Council. Letters related to revenue had to be sent to the Treasury, while those concerning civil and military affairs were to be sent to one of the Secretaries of State.

• The Governor-General of Bengal and the Governors of Bombay and Madras had to obey the orders of the Directors and keep them informed of matters affecting the Company’s interests.

• A provision was made for a Governor-General of Bengal and a Council of 4 members, who were vested with the civil and military governance of the Presidency and the management of territorial acquisitions and revenues in Bengal, Bihar, and Orissa.

• Warren Hastings was appointed the first Governor-General of Bengal, with Clavering, Monsan, Philip Francis, and Barewell as members of his Council.

• Council members held office for 5 years and could only be removed by the Crown on the Directors’ recommendation.

• The Governor-General was required to follow the majority opinion of the Council but had a casting vote in case of a tie.

• The Governor-General had the power to supervise the Presidencies of Madras and Bombay, but in cases of emergency or direct orders from the Directors, these Presidencies could act independently of Bengal.

• Governors-in-Council of Bombay and Madras were obligated to follow the orders of the Governor-General of Bengal and submit advice on government, revenues, and the Company’s interests.

• They had to forward all rules and regulations they framed to the Governor-General-in-Council. Failure to comply could result in suspension by the Governor-General-in-Council.

• The Governor-General-in-Council was given the power to make rules, ordinances, and regulations for the governance of Company’s settlements and factories, which had to be in line with the laws of England and registered with the Supreme Court.

• These rules could be disallowed by the King-in-Council within two years.

• The Regulating Act established a Supreme Court with a Chief Justice and three Puisne judges, with Sir Elijah Impey as the first Chief Justice.

• The Supreme Court had jurisdiction over civil, criminal, admiralty, and ecclesiastical cases, functioning as a Court of Record and Court of Oyer and Terminer for Calcutta, Fort William, and other factories under its jurisdiction.

• The Court had the authority to try all cases involving British subjects in Bengal, Bihar, and Orissa, including complaints against any Company servants or His Majesty’s subjects.

• The Court had both original and appellate jurisdiction, and cases were to be tried by a jury.

• The Act prohibited the receiving of presents or bribes by Company servants, stating that no civil or military office holder under the Crown could accept gifts or rewards.

• Offenders were required to make double payment and could be transported to England.

• The Act set an upper limit on interest rates at 12 percent for British subjects.

• If any official such as the Governor-General, Governor, Council members, or Supreme Court judges committed an offense, they were liable to be tried and punished by the King’s Bench in England.

• The salaries of key officials were fixed: the Governor-General received £25,000 annually, each Council member was allotted £10,000, the Chief Justice received £8,000, and an ordinary judge received £6,000 annually.