The Company Rule in India (1773-1858) | 05 Oct 2021

Introduction

• Beginning of Rule: The British East India Company was established as a trading company in 1600 and transformed into a ruling body in 1765.
• Interference in Internal Affairs: After the Battle of Buxar (1764), the East India Company got the Diwani (right to collect revenue) of Bengal, Bihar and Orissa and gradually, it started interfering in Indian affairs.
• Exploitation of Power: The period from 1765-72 saw duality in the system of government where the Company had the authority but no responsibility and its Indian representatives had all the responsibility but no authority. This resulted in:
  
  • Rampant corruption among servants of the Company.
  • Excessive revenue collection and oppression of peasantry.
  • The Company’s bankruptcy, while the servants were flourishing.
• Response of British Government: To bring some order into the business, the British government decided to regulate the Company with a gradual increase in laws.

Acts Introduced by British Government

• Regulating Act, 1773:
  
  • Company Retains Possessions: This act permitted the company to retain its territorial possessions in India but sought to regulate the activities and functioning of the company.
  • Control over Indian Affairs: Through this act, for the first time, the British cabinet was given the right to exercise control over Indian affairs.
  • Introduction of Governor-General: It changed the post of Governor of Bengal to “Governor-General of Bengal”.
    
    • The administration in Bengal was to be carried out by the governor-general and a council consisting of 4 members.
    • Warren Hastings was made the first Governor-General of Bengal.
    • The Governor of Bombay and Madras now worked under the Governor-General of Bengal.
  • Establishment of Supreme Court: A Supreme Court of judicature was to be established in Bengal (Calcutta) along with appellate jurisdictions where all subjects could seek redressal.
    
    • It comprised one chief justice and three other judges.
    • In 1781, the Act was amended and the Governor-General, the Council and the servants of the government were exempted from the jurisdiction if they did anything while discharging their duties.
• Pitt’s India Act, 1784:
  
  • Dual Control System: It established the dual system of control by the British government and the East India Company.
    • The Company became a subordinate department of the State and its territories in India were termed ‘British possessions’.
    • However, it retained the control of commerce and day-to-day administration.
  • Court of Directors and Board of Control Established:
    
    • A Board of Control was formed to exercise control over the Company’s civil, military and revenue affairs. It consisted of:
      
      • The chancellor of exchequer
      • A secretary of state
      • Four members of the Privy Council (appointed by the Crown)
    • The important political matters were reserved to a secret committee of three directors (Court of Directors) in direct touch with the British government.
  • Governor-General and Commander-in-Chief: The council of governor-general was reduced to three members including the commander-in-chief.
    
    • In 1786, Lord Cornwallis was granted the power of both the governor-general and the commander-in-chief.
    • He was allowed to override the council’s decision if he owned the responsibility for the decision.
• Charter Act, 1793:
  
  • Extension of Powers to Governor-General: It extended the overriding power given to Lord Cornwallis over his council, to all future Governor-Generals and Governors of Presidencies.
  • Appointments of Senior Officials: The royal approval was mandated for the appointment of the governor-general, governors, and the commander-in-chief.
    
    • Senior officials of the Company were debarred from leaving India without permission—doing so was treated as resignation.
  • Payments of Officials: It laid down that the members of the Board of Control and their staff were to be paid out of the Indian revenues (it continued up till 1919).
    
    • The Company was also asked to pay 5 lakh pounds annually to the British government (after paying its necessary expenses).
• Charter Act, 1813:
  
  • Demand of English Traders: The English traders demanded a share in the Indian trade.
    
    • This demand was particularly in view of loss of trade due to the Continental System of Napoleon Bonaparte who sought to cripple England commercially.
  • End of Company’s Monopoly: By this, the Company was deprived of its commercial monopoly and ‘the undoubted sovereignty of the Crown’ over the possessions of the East India Company was laid down.
    
    • However, the company was allowed to enjoy the monopoly of trade with China and trade in tea.
  • Assistance to Learned Natives: A sum of Rs.1,00,000 annually was provided for the revival of literature, encouragement of learned Indian natives and promotion of scientific knowledge among the Indians.
    
    • This was the first step towards acceptance of the principle of State responsibility for education.
• Charter Act, 1833:
  
  • Company’s Trade Situation: The lease of 20 years provided to the Company (under Charter Act, 1813) for the possession of territories and the revenue collection was further extended.
    
    • However, the Company’s monopoly over trade with China and in tea ended.
  • European Immigration: All restrictions on European immigration and the acquisition of property in India were lifted which paved the way for the wholesale European colonisation of India.
  • Introduction of Governor-General of India: The post name of Governor-General of Bengal was converted into "Governor-General of India".
    
    • He was given the power to superintend, control and direct all civil and military affairs of the Company.
      
      • All revenues were raised under his authority and he had complete control over the expenditure too.
    • William Bentinck became the first Governor-General of India.
  • Law Commission: It was established under this act for the consolidation and codification of Indian Laws.
    
    • It added a fourth ordinary Member to the Governor-General’s Council for India who was to be a legal expert in the making of laws.
    • Lord Macaulay was the first to be appointed as the fourth ordinary Member.
• Charter Act, 1853:
  
  • Company’s Trade Situation: The Company was to continue possession of territories unless the Parliament provided otherwise.
    
    • The Company’s patronage over the services was dissolved; the services were now thrown open to a competitive examination.
  • Fourth Ordinary Member: The law member became the full member of the governor-general’s executive council.
  • Indian Legislative Council: Local representation was introduced in the Indian legislature. This legislative wing came to be known as the Indian Legislative Council.
    
    • However, promulgation of a law required the assent of the governor-general who could veto any Bill of the legislative council.
• Government of India Act, 1858:
  
  • Outcomes of 1857 Revolt: The Revolt of 1857 had exposed the Company’s limitations in administering under a complex situation.
    
    • The revolt offered the opportunity as the demand for divesting the Company of its authority over the Company’s territory.
  • End of Company Rule: The dual system introduced by the Pitt’s India Act came to an end now India was to be governed by and in the name of the Crown through a secretary of state and a council of 15.
    • The council was just advisory in nature.
  • Introduction of Viceroy: The title of Governor-general of India was replaced with the Viceroy which increased the prestige of the title holder if not his authority.
    
    • The Viceroy was appointed directly by the British government.
    • The first Viceroy of India was Lord Canning.