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Unit 2: Consolidation of British Raj (1818-1843) and Development of Central Structure (1773-1863)

The fat was really in the fire when the Directors of the bankrupt Company applied to the Government Notes
for relief; for in doing so, they signed the death warrant of their Company’s independence. The
opportunity to turn its distress to the advantage of the State and especially of its Royal Head was too
good for the resurrected Tories to miss. Lord North with secure majorities in both Houses of Parliament
prudently referred the application to Parliament. A Select Committee was appointed to enquire into
the Company’s affairs. This Committee was presided over by General Burgoyne who in proposing a
resolution for the appointment of the Committee declared: ‘The most atrocious abuses that ever stained
the name of civil government called for redress...if by some means sovereignty and law are not
separated from trade, India and Great Britian will be sunk and overwhelmed never to rise again.”
Certainly, the conduct of the Directors supplied abundant food for speculation. In March of that year
(1772) they had declared another dividend of 12.5% in August they asked the Government for of loan
of £ 1 million. The discrepancy was so glaring that it caused the House of Commons to appoint a
second (Secret) Committee to investigate the reasons for it. Why should a Company go bankrupt,
members pertinently asked, when its servants were returning to England with their pockets bulging
with gold. It was an interesting question.
In the spring of the following year the Committees of Enquiry issued their reports. As expected these
were highly condemnatory. Two Acts of Parliament were passed. The first granted the Company a
loan of £ 1, 400,000 at 4% interest on certain conditions. The second was the important Regulating
Act. The Regulating Act was not passed without opposition in Parliament. The bill was fiercely opposed
by the Company and its friends.
Provisions of the Regulating Act: The Act remodelled the constitution of the Company both in England
and in India. In England the right of vote in the Court of Proprietors was raised from £ 500 to £ 1,000.
It was provided that the Court of directors, hitherto elected every year, was henceforth to be elected
for four years. The number of Directors was fixed at 24, one-fourth retiring every year. The Directors
were required to “lay before the Treasury all correspondence from India dealing with the revenues
and before a Secretary of Stage everything dealing with civil and military administration.” Thus, for
the first time the British Cabinet was given the right of controlling Indian affairs, although the right
was imperfect.
In Bengal a collegiate government was created consisting of a Governor-General (President) and four
members of the Council. The vote of the majority was to bind the Council, the Governor-General
having a casting vote when there was an equal division of opinion. Three members of the Council
formed a quorum. The first Governor-General (Warren Hastings) and Councillors (Philip Francis,
Clavering, Monson and Barwell) were named in the Act. They were to hold office for five years, and
could be removed earlier only by the King on the recommendation of the Court of Directors. Future
appointments were to be made by the Company. The Governor-General-in-Council were vested with
the civil and military government of the Presidency of Fort William in Bengal. They were to superintend
and control in certain matters the subordinate Presidencies of Madras and Bombay.
The Act empowered the Crown to establish by charter a Supreme Court of Judicature, consisting of a
Chief Justice and three puisne judges. The Supreme Court was to be a Court of Equity and of Common
Law, a Court of Admiralty, and Ecclesiastical Court. All the public servants of the Company were
made amenable to its jurisdiction. All British subjects in Bengal, European and Indian, could seek
redress in the Supreme Court against oppression ; the Supreme court could also entertain suits, actions
and complaints against persons in the Company’s service or any of His Majesty’s subjects. The Court
could determine all types of cases and grant redress through all the methods then in vogue in English
judicial procedure. The Court was given both original and appellate jurisdiction. Following the British
custom, the Court heard these cases with the help of a jury of British subjects. The Supreme Court
was constituted in 1774 with Sir Elijah Impey as Chief Justice and Chambers, Lemaister and Hyde as
the Puisne judges.
The Regulating Act laid down the fundamental principle of honest administration by providing that
“no person holding or exercising any civil or military office under the Crown shall accept, receive or
take directly or indirectly any persent, gift, donation, gratuity or reward, pecuniary or otherwise.”
Liberal salaries were provided for the Governor-General (£ 25,000), each member of the Council
(£ 10,000), the Chief Justice of the Supreme Court (£ 8,000) and for each puisne Judge (£ 6000) a year.

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