Regulating Act, 1773

At a Glance

• What it isThe first law passed by the British Parliament to regulate the East India Company’s affairs in India
• Passed in1773, under the British government of Lord North
• Supreme Court set up1774, at Fort William, Calcutta
• First Governor-General of BengalWarren Hastings
• First Chief JusticeSir Elijah Impey
• Exam linkPrelims Polity, Historical Background (the first step in the Constitution’s story)

Why the Act Was Needed

After the East India Company took over the Diwani (revenue rights) of Bengal in 1765, it became a ruler as well as a trading company. Its servants earned large private profits, corruption was common, and by the early 1770s the Company was in financial trouble and needed help from the British government.

Parliament decided that a trading company could not be left to run a large territory without any control. The Regulating Act was its first attempt to bring the Company’s Indian affairs under British law and supervision, which is why the word “regulating” is in the name.

Key Provisions

1. A Governor-General for Bengal

The Governor of Bengal became the Governor-General of Bengal, with a council of four members to assist him. Decisions were taken by majority, and the Governor-General had only a casting vote when the council was tied. Warren Hastings was the first to hold the post.

2. Control over Bombay and Madras

The presidencies of Bombay and Madras were made subordinate to Bengal in matters such as war and peace. This was the first step towards a centralised administration.

3. A Supreme Court at Calcutta

The Act created a Supreme Court at Calcutta (set up in 1774) with a Chief Justice and three other judges. It heard civil and criminal cases, and Sir Elijah Impey was its first Chief Justice.

4. Rules for Company servants

Servants of the East India Company were banned from private trade and from accepting gifts or bribes from Indians.

5. More accountability to Britain

• The term of the Company’s Directors was fixed at four years.
• The Directors had to report the Company’s revenue, civil and military affairs in India to the British government.

Significance

• It recognised, for the first time, the political and administrative functions of the Company.
• It made the Company answerable to the British Parliament.
• It laid the foundation of a centralised system of administration in India.

Limitations

• The Governor-General could be overruled by the majority of his council, which led to constant quarrels.
• The powers of the Supreme Court and of the council were not clearly separated, so the two clashed. A later law, the Act of Settlement, 1781, tried to fix this.
• Control over the other presidencies stayed weak in practice.