Regulating Act 1773,

Introduction:The Regulating Act 1773 was a significant piece of legislation

passed by the British Parliament to address the administrative issues and
financial crisis facing the British East India Company in India. The Regulating
Act of 1773 was the first step towards British government control of the
company's affairs, laying the groundwork for centralised administration in
India.

This Act was passed in response to the company's mismanagement and

financial crisis, to implement governance and accountability reforms. The
Regulating Act of 1773 introduced changes in the structure of the Company’s
administration and marked the beginning of formal British colonial rule in
India.

Regulating Act 1773 Background

The Regulating Act of 1773 emerged as a response to a confluence of
financial, administrative, and ethical crises within the British East India
Company, which had profound implications for both the Company and British
governance in India.

 Financial Problems: By the early 1770s, the East India Company

faced severe financial difficulties due to widespread mismanagement
and corruption among its officials in India.
 Famines: The 1770 Bengal famine led to millions of deaths, a severe
economic downturn, reduced agricultural productivity, declining tax
revenues, and disrupted trade.
 Dual Form of Government: Robert Clive's dual administration was
complicated and unpopular. The company held Diwani rights (tax
collection) in Bengal, while the Nawab had Nizamat rights (judicial and
policing). However, the company controlled both powers, neglecting
farmers and public welfare to focus solely on revenue.
 Loans of the Company: The East India Company was in debt to both
the Bank of England and the government, with millions of pounds of tea
rotting in British warehouses and more on the way from India.

Regulating Act 1773 Provisions

The Regulating Act of 1773 aimed at reforming the administration of the
British East India Company and establishing greater oversight of its
operations in India. Below are the key provisions of the Regulating Act 1773:
  Governor-General of Bengal: The Regulating Act 1773 elevated the
Governor of Bengal, Warren Hastings, to the position of Governor-
General of Bengal, with an executive council of four members to assist
him. They were required to function according to the majority rule.
 Centralisation of Power: It made the governors of the Bombay and
Madras presidencies subordinate to the governor-general of Bengal, as
opposed to the previous system in which the three presidencies were
independent. This established a centralised authority over the
presidencies of Madras and Bombay.
 Supreme Court at Calcutta: The Regulating Act 1773 established a
Supreme Court at Fort William in Calcutta in 1774, comprising a Chief
Justice and three other judges, to administer British legal principles.
o Sir Elijah Impey was the first Chief Justice.
o Judges were to come from England.
o The court had civil and criminal jurisdiction over British subjects,
not Indian natives.
 Control over Company Officials: The Regulating Act of 1773
prohibited company servants from engaging in private trade or
accepting bribes, aiming to curb corruption.
 Reporting Requirements: The Act strengthened the British
Government's control over the Company by requiring the Court of
Directors (the Company's governing body) to report on revenue, civil
and military affairs in India.
 Financial Regulation: The Regulating Act 1773 limited the company's
dividends to 6% until it repaid a government loan and restricted the
terms of the Court of Directors to four years.

Regulating Act 1773 Significance

The Regulating Act 1773 is regarded as a landmark because it resulted in
numerous dynamic and significant changes to the country's judiciary
structure. The Regulating Act of 1773 was significant for several reasons:

 First Step Towards Parliamentary Control: The Regulating Act 1773

was the first step taken by the British government to control and
regulate the affairs of the East India Company in India, laying the
groundwork for future legislative interventions.
 Recognition of Company’s Function: For the first time, it recognised
the Company's political and administrative functions.
 Judicial Reforms: The establishment of the Supreme Court was a
critical step in introducing a legal framework in India based on British
law, which influenced the evolution of the Indian judicial system.
 Centralisation of Power: The establishment of the Governor-General
position and the centralisation of authority in Bengal paved the way for
more unified and structured governance of British territories in India.
Regulating Act 1773 Drawbacks
Despite the introduction of reforms and improved governance, the Regulating
Act 1773 encountered various challenges that hindered its effectiveness and
created new issues within the Company's rule in India.

 Governor-General’s Lack of Veto Power: The Regulating Act 1773

did not grant the Governor-General veto authority, leaving him
vulnerable to being frequently overruled by the majority decisions of his
council members.
 Unclear Jurisdiction of the Supreme Court: The Regulating Act 1773
failed to clearly outline the powers and jurisdiction of the Supreme
Court at Fort William, causing confusion and conflicts over authority
between the Governor-General and the Supreme Court.
 Neglect of Indian Interests: The Regulating Act 1773 failed to address
the concerns of the Indian population, particularly those who paid taxes
to the East India Company, leaving their problems unresolved and their
interests ignored.
 Weakened Regional Governance: By centralising power in the
Governor-General, the Regulating Act 1773 diminished the authority
and effectiveness of the governors in the Bombay and Madras
presidencies, leading to administrative inefficiencies and corruption.
 Limited Parliamentary Oversight: The Regulating Act 1773 did not
give Parliament sufficient powers to scrutinise the Governor-General's
reports effectively, potentially limiting transparency and accountability in
India's administration.
Amending Act of 1781
The British Parliament passed the Amending Act of 1781, also known as the
Act of Settlement, to correct the flaws in the Regulating Act of 1773.

 Immunity for Governor-General and Council: It exempted the

Governor-General and the Council from the Supreme Court's
jurisdiction over their official acts. Similarly, it exempted the company's
servants from Supreme Court jurisdiction for official actions.
 Revenue Jurisdiction Exclusion: It excluded revenue matters and
revenue collection issues from the Supreme Court's jurisdiction.
 Jurisdiction of the Supreme Court: It stated that the Supreme Court
would have jurisdiction over all inhabitants of Calcutta. It also required
the court to apply the defendants' personal law, which meant that
Hindus would be tried under Hindu law and Muslims under
Mohammedan law.
 Appeals from Provincial Courts: It stated that appeals from Provincial
Courts could be directed to the Governor-General-in-Council rather
than the Supreme Court.
 Elevated Powers of Governor-General: The Governor-General-in-
Council was granted the authority to establish regulations for the
Provincial Courts and Councils.
 However, The act was not a long-term solution to the company's affairs
and was followed by the Pitt's India Act in 1784, which was a more
radical reform.