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Module 4 The Regulating Act of 1773

llb (Indian Law Society's Law College)

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Module 4: Regulating Act of 1773

Synopsis:
1. Circumstances prior to Act of 1773
2. Features of Regulating Act of 1773
3. Legislative Power under Act of 1773
4. Charter of 1774 and SC at Calcutta
5. Critical Estimate of Regulating Act of 1773 and Charter of 1774
6. Raja Nandkumar
7. Kamaluddin
8. Patna Case
9. Cossijurah
10. Salient features of the Settlement Act, 1781
11. Defects of Settlement Act, 1781
12. SC at Calcutta
13. SC at Madras and Bombay
14. Laws administered in SC

1. Circumstances prior to Act of 1773:

(a) The British Parliament and the Company:
- Earlier, the Company was mainly concerned with trade and commerce in India but its subsequent
political involvements and territorial gains created a new situation. An established principle of
English Constitutional law was that no subject could acquire territories except for the Sovereign.
- In 1759, Lord Clive suggested that the Crown should take over the territories which were in
possession of the Company. At this stage, the Parliament took no steps as there were 3 points of
view for it to consider:
1. Company’s privileges and powers must remain untouched.
2. Crown should take over full sovereignty of Company’s territorial possessions in India.
3. The Crown may take over the Company into partnership, assuming the position of a
controlling and dominant partner in all matters. It was acceptable to the British Parliament
and gradually the British Government made every effort to realize it.
- The spirit of bargaining with the Company started by an Act of 1767 when the British
Government permitted the Company to retain its territorial acquisitions and its powers for two
years on condition that a sum of £400,000 per year be paid by the Company in return to the
Crown.
- The demand of Parliament continued increasing as it was supposed that the Company was
making fortunes in India, till it was discovered that the Company instead had fallen into debts. In
spite of the Company's deteriorating financial condition Parliament derived advantage and
asserted its right to the sovereignty of the Indian territories.
(b) Causes for taking over the Company:
- (I) Public opinion against the Company gathered momentum in England.
- (2) Corruption amongst the servants of the Company.
- (3) Complicated administrative problems of the dual government.
- (4) Lack of proper judicial administration.
- (5) Lack of central authority to control and guide the affairs of the Company.
- (6) Deteriorating financial condition of the Company and its heavy debts.
- (7) Company's defeat in 1769 at the hands of Haider Ali of Mysore.

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- (8) Terrible famine in Bengal which took a heavy toll of its population.
- (9) The Company applied for a loan of one million pounds in 1772.
(c) Appointment of Parliamentary Committees:
- British Parliament got an opportunity to tighten its stronghold on the Company's affairs.
- The House of Commons appointed two Parliamentary Committees, namely, a Select Committee
and a Secret Committee to study in detail the financial position of the Company and related
matters and to uproot corruption from the administrative and judicial machinery of the Company.
- In March 1773 the Company renewed an appeal for a loan and subsequently in May the House
passed a resolution, "That all acquisitions made under the influence of a military force, or by
treaty with foreign princes, do of right belong to the State." Ultimately two Acts were passed by
Parliament in 1773.
(d) Main Objects of the Bill:
- First Act granted to the Company a loan of £1,400,000 at 4% interest. The Company was
forbidden to declare dividends exceeding 6% and it was required to submit accounts after every
six months to the Treasury.
- The second and far more important was the Regulating Act, 1773, which was introduced by Lord
North on May 18, 1773 in the House of Commons as Regulating Bill. Its three main objects were
to (i) reform the constitution of the Company, (ii) to reform the Company's government in India,
and (iii) to provide remedies against illegalities and oppressions committed by the servants of
the Company in India.
- Accordingly, Regulating Act changed the constitution of the Company at home, altered the
structure of the Government of India and provided, though in a very inefficient manner, for the
supervision of the Company by a ministry. The Bill was ultimately passed by an overwhelming
majority, on June 10, 1773 and subsequently by the House of Lords 12 and received the Royal
assent on June 21, 1773.
2. Salient Features of the Regulating Act, 1773:
- The Regulating Act, 1773 permitted the Company to retain its Indian possessions but its
management was brought under the definite control of Crown and Parliament. The Act may be
regarded as Parliament's first attempt to construct a regular Government for India and to
intervene in the control of the Company's administration. It was mainly intended to impose
control over the Company and the servants of the Company in India as well as in England.
A. Election of Directors: 24 Directors elected for 4 years. 1/4th retire every year. Retiring Directors
not entitled to reappointment. The voting qualification for the Court of Proprietors was raised
from holding a stock of £ 500 to £ 1,000. An unfortunate feature of the new provision was that
those possessing a stock of £ 3,000 were given two votes, while those possessing a stock of £
10,000 were given four votes each.
B. Control over Correspondence: Directors were required to place regularly all their
correspondence, regarding civil and military affairs with the Indian authorities, before the
Secretary of State. All correspondence relating to revenues in India was required to be placed
before the Treasury in England.
C. Appointment of Governor-General (GG) and Council: Governor General and four Councillors
were appointed by the Presidency of Fort William in Bengal. The Act stated the names of the
first Governor-General and four Councillors. Warren Hastings who was Governor of Bengal, was
appointed the first Governor-General. Their term of office 'was for five years and the King was
empowered to remove them even earlier on the recommendation of the Court of Directors.
D. Decision by Majority Present: All the decisions in the Council were to be arrived at by majority of
votes. The GG did not have any special privilege of vetoing the majority, he had only one vote,

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though in case of a tie he had a casting vote. Majority of the Council had the power to defeat
GG’s policies.
E. Extent of GG’s Power: The Governor-General was given all the powers to govern the Company's
territorial acquisitions in India, to administer the revenues of Bengal, Bihar and Orissa and to
supervise and control the general civil and military government of the Presidency.
F. Bombay and Madras under Control of GG: Presidencies in Bombay and Madras were put under
control of GG in matters of war and peace subject two exceptions, viz., imminent necessity which
would render postponement of war dangerous and special orders from Court of Directors.
Subordinate governments were required to transmit regularly to GG information about all the
transactions relating to government, revenues and interest of the company.
G. Establishment of the Supreme Court of Judicature: Empowered the Crown to establish by
Charter a Supreme Court of Judicature at Fort William in Calcutta to remove Mayor’ Court.
3. Legislative Power under the Act of 1773:
(a) General Power: Governor-General and Council- authorized to make and issue rules, ordinances
and regulations for the good order of civil government of Company's settlements at Fort
William and other subordinate factories and places.
(b) Restrictions on General Power:
1. Required to be just and reasonable and not repugnant to the laws of England.
2. Not to be valid until they were duly registered in the Supreme Court.
3. Rules and ordinances were registered only after the expiration of 20 days from their open
publication.
4. Any person (in India or England) was legally entitled to file an appeal against such regulation
to the King-in-Council within 60 days after its publication.
5. Within a period of 60 days from its registration an appeal was allowed to be made to the
Supreme Court at Calcutta against rules and regulations.
6. King reserved the power to disapprove of them at any time within two years from the date
they were passed by the Governor-General and Council.
7. Company's officials were prohibited from engaging themselves in private trade and also from
accepting presents in various forms.
8. Courts in England were also empowered to punish English people for their crimes during
service under Company in India.
- Restrictions were imposed:
a. To safeguard the interest of British people.
b. To safeguard the imperial policy in India.
c. To check the hasty actions of GG and Council.
d. To prevent abuses and corruption in the administration of Company.
4. Charter- of 1774 and the Supreme Court at Calcutta:
- Under Section 13 of Regulating Act, 1773, George III issues a Charter on 26th march 1774 which
established a SC at Calcutta. It was a Crown’s Court. Successor of Mayor’s Court.
(1) Constitution, Power and Jurisdiction: The Supreme Court was to consist of a Chief Justice
and three Puisne Judges, being barristers of not less than five years' standing to be
appointed by His Majesty. It was further provided that the Supreme Court would have full
power and authority to exercise all civil, criminal, admiralty and ecclesiastical jurisdiction.
In criminal cases it would act as a Court of Oyer and Terminer and Gaol Delivery for the
town of Calcutta and the factories subordinate thereto. The Supreme Court was authorized
to form and establish such rules of practice for the subordinate courts as were necessary
for the administration of Justice and due execution of all the powers as stated in the Chapter.

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It was recognized as a Court of Record. It had jurisdiction over all British subjects residing in
Bengal, Bihar and Orissa and had power to decide all complaints regarding crime,
misdemeanous or oppressions. It had jurisdiction over servants of the Company too.
(2) Immunity of GG and Council: Supreme Court will be incompetent to exercise its criminal
jurisdiction over the Governor-General and any of his Councillors. Immunity was granted to
safeguard them from unnecessary harassment and also to maintain their prestige.
(3) Junstices of Peace: GG, members of the Council and Judges of SC were to act Justices of
Peace and to hold Quarter Sessions.
(4) Appeals: The 1773 Act empowered the Crown to issue a Charter to make provisions for
appeals from SC to King-in-Council and circumstances under which such appeal was allowed.
- Sir Elijah Impey – First Chief Justice. For subsequent appointment of judge, stated qualification as
of at least 5 years’ standing as a Barrister of England and Ireland. The judges were to hold office
at the pleasure of the King. Each judge was a Justice of Peace. Court was authorized to make its
own rules and regulations. It can appoint subordinate staff with the consent of GG.
- Jurisdiction:
o Civil – Cause of action exceeded Rs.500. Appeals from Mofussil Court. Valuation exceeded
1000 pagodas – appeal to King-in-Council within 6 months from decision of SC.
o Criminal – It was to be a court of Oyer and Terminer and Gaol Delivery in and for the town
of Calcutta, the factory and Fort William and subordinate factories. All offences of which SC
had cognizance were to be tried by a Jury of British subjects residents in Calcutta.
o Superintend Court of Collector, Quarter Sessions and Court of Requests.
o Ecclesiastical, civil, criminal jurisdiction over all British subjects in Bengal, Bihar and Orissa
and over all the persons employed by the Company.
o Court of Power of Equity and of Court of Admiralty were also given to SC.
o Also nominated 3 persons for Sheriff’s office when the selection was made by GG and
council.
o The Supreme Court was vested with four distinct jurisdictions, namely, civil, criminal,
ecclesiastical and admiralty.
- The population of 3 provinces can be categorized in 4 categories, namely, British subjects,
servants of the Company, Inhabitants of Calcutta and Indians residing in 3 Provinces(BMC).

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