Regulating Act 1773, Background, Provisions, Significance, Drawbacks

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. 
  • Sir Elijah Impey was the first Chief Justice. 
  • Judges were to come from England. 
  • 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.

Regulating Act 1773 FAQs

Q1. Which viceroy passed the Regulating Act of 1773?

Ans. The Regulating Act of 1773 was passed by the British Parliament rather than a viceroy. At the time, the position of Viceroy did not exist.

Q2. Which court was established under Regulating Act of 1773?

Ans. The Supreme Court of Judicature was established in Calcutta in 1774 by the British King's Regulating Act of 1773.

Q3. What was the Amendment of Regulating Act 1773?

Ans. The Regulating Act of 1773 was amended by the Amending Act of 1781, which clarified the jurisdiction of the Supreme Court and the powers of the Governor-General-in-Council.

Q4. What is the 1773 Act also known as?

Ans. The Regulating Act of 1773 is also known as the East India Company Act of 1773.

Q5. What was the significance of the Regulating Act of 1773?

Ans. The Regulating Act of 1773 was the first step by the British government to regulate the affairs of the East India Company.