CHARTER ACTS AND EAST INDIA COMPANY: How was imperialist East India Company ruled by Charter Acts till 1857?


CHARTER ACTS AND EAST INDIA COMPANY: How was East India Company ruled by Charter Act till 1857?

Charter Acts and East India Company: How East India Company was ruled by Charter Acts till 1857?
Charter Acts and East India Company: How East India Company was ruled by Charter Acts till 1857?
“How East India Company Ruled By Charter Act till 1857?” Historically, after acquiring the royal charter from the ruler of England in 1600, the British syndicated East India Company attained a monopoly on trade with East. The company eliminated competition in business; asserted control over Bengal after Battle of Plassey 1757; achieved Diwani rights ( i.e. revenue collection rights over Bengal, Bihar and Orisha) after Treaty of Allahabad 1765 and emerged as a supreme political power by the middle eighteenth century. But interestingly, the company experienced financial collapse by the second half of the eighteenth century because of nepotism and persistence of corruption in company officials. ( Such corrupt officials were often referred as nabobs– an anglicised form of the nawab.)
British Parliamentary Government investigated the inherent functioning of the company and introduced several acts to induce discipline in the company officials.

Regulating Act/ Charter Act (1773):

This Act is based on the report presented by British Prime Minister Lord North who recognized the Company’s functioning as an administrative and political entity in India. Under this act, the following provisions were introduced to exert autonomy over the East India Company and to induce discipline in company officials.

  • Governance under the British Parliamentary GovernmentThe Act attempted to regulate the company’s internal and external affairs under the supervision of the British Parliament and therefore Court of Directors were instructed to yearly submit revenue and military reports to the British government.
  • Centralization of law-making powers in Bengal for Legislative Uniformity: During that time, India was sub-divided into three major administrative presidencies- Bengal, Madras and Bombay. Under the provisions of this act, the legislative powers were started to be centralized in Bengal and therefore Governor of Bengal was called Governor-General of Bengal and the first one was Warren Hastings.  A 4-membered executive committee called Governor-General in Council was also structured to guide and assist Governor-General.
  • Establishment of Supreme Court-A Supreme Court was established in Fort Williams Calcutta for judicial investigation and redressal of public grievances. The first Chief-Justice of SC was Sir Elijah Impey. 
  • Prohibition on Governor- Judges and Company officials on receiving gifts.

This Charter Act has undeniably a considerable significance in Indian history but it couldn’t effectively regulate the company affairs since SC’s powers were not well-specified and rigid. Therefore, it couldn’t eliminate corruption and needed to be amended in 1781.

Amending Act/ Settlement Act (1781):

This act was introduced to rectify the loopholes of the previous act.
  • Amendment of Jurisdiction of Supreme Court-Under the provisions of this act, SC’s geographical jurisdiction was confined to Calcutta only. The appellate jurisdiction was shifted from Supreme Court to Governor-General in Council. In this way, judicial and executive powers were separated.
  • It also stated that Hindu laws to be applied on Hindu cases while Quranic laws on Muslim
  • (Now East India Company turned rebellious and started non-cooperating ‘coz they are dominated by British Crown even after 173 years of establishment but British Parliamentary Government restricted the rules.)

Pitts India Act (1784):  

It was named after Pitts the Younger, the British Prime Minister who introduced thus act and extended his authority over EIC’s territories in India. Therefore, EIC’s territorial region was called British possession.

  • Bifurcation of political and commercial/financial powers: In accordance to the provisions, a 6-membered committee called Board of Control was established that broadly represents British Government and includes Chancellor of Exchequer, Secretary of State and 4 members of Privy Council. The commercial/financial and political powers were bifurcated between Court of Directors [i.e. representative of EIC] and Board of Control respectively. Therefore, EIC acquired commercial powers while the British Crown attained political sovereignty.

Due to the vague distinction between powers of two bodies, the disputes between the British Crown and EIC started.

ACT OF 1786:

Cornwallis demanded the following two powers for accepting the position of Governor-General of Bengal.

  • Power to override a decision of his council in the special case
  • Would also be Commander-in-Chief

Charter Act (1793): 

This act greatly consolidated the provisions laid out in previous acts.

  • Elevation of Indian revenueThis act provisioned for the elevation of Indian revenue so that salaries of Board of Control could be charged on it. Also, EIC has to pay Rs 5 lakhs pounds annually to British Government surplus revenue.
  • Renewal of EIC’s Business Monopoly for 20 more years.
  • Continuation of centralization of law-making powers in Bengal for Legislative- Uniformity: Governor-General of Bengal was empowered with more legislative powers over subordinate presidencies.
  • Separation of Revenue administration and Judicial functions-Disappearance of maal adatlats
  • The court was empowered to analyze, interpret and codify Indian rules and regulations.

Charter Act (1813) :

As a consequence of the emergence of the spirit of laissez-faire and Napolean’s continental system, Charter Act 1813 was introduced.

  • End of EIC’s Trade Monopoly in India except for Trade on Tea and Trade with China.
  • Propagation of Christianity: Christian missionaries were allowed to preach, profess and propagate their religion in India. Britishers considered Hinduism, Muslim laws as somewhat obsolete therefore they permitted propagation of Christianity.
  • Educational Enrichment in India: The Britishers allotted Rs. 1 lakh for enriching Indian Educational System and to encourage scientific knowledge amongst natives of the country
  • Defined separation of commercial transactions and revenue administration between the Board of Control and Court of Directors

  • Was East India Company supremely functioning as a Colonial Trading Group till 1857?

Charter Act (1833) :

Also Known as St. Helena Act

  • Complete Centralization of legislative powers in Bengal: Under this enactment, the legislative powers were entirely centralized in Bengal. Now, the Governor-General of Bengal was renamed Governor-General of India. (The first Governor-General of India was William Bentinck.) and his council called Indian Council.
  • Complete End of EIC’s Trade Monopoly in India: Now the company completely reduced to an administrative entity since its trading monopoly including Trade in Tea and Trade with China ended.
  • Addition of law member in GGC for professional advice on law-making
  • British administration urged EIC to ameliorate Slavery
  • Codification and Consolidation of Indian laws
  • Legalization of European Colonization in India: The restrictions on European immigration and acquisition of property in India were removed, therefore legalizing European Colonization in India.

Charter Act (1853):

  • Open Civil-Services Examination: The selection procedure of Civil Servants and recruitment was thrown open to all including Indians.
  • Empowered Governor-General to veto a decision in Imperial Legislative Council.
  • EIC entrusted to put Company’s Governance to end at any suitable time
  • The number of members of the Court of Directors was lessened from 24 to 18. Out of those eighteen, 6 members were nominated by the British Crown.[ 1st Indian in Civil Services: Satyendranath Tagore in 1863.]

(For post-1857 legislative and administrative acts, refer to the link: Administrative and Legislative Reforms after the Revolt of 1857)

Was East India Company supremely functioning as a Colonial Trading Group till 1857?
Charter Act – Analysis by Gaurav Rathi
Summing up the intention of introduction of these Acts, we can broadly comprehend that British Parliamentary Government was dominating power over East India Company after 1773 but the Company was constantly undermining the authority of Crown and non-cooperating with them. Therefore, the British Government steadily took control over Company affairs and started to exert pressure over EIC. After the Revolt of 1857, EIC was permanently abolished since the British Government believed EIC policies- Dalhousie Doctrine of Lapse, Ryotwari System etc. as the chief causes of rebellion.


Gaurav Rathi

An enthusiastic Delhiite, Gaurav Rathi is pursuing B.A. English Hons. in Delhi University. Rather than reading history, he likes re-inventing and re-approaching history and while not researching and writing blogs, he is reading novels or celebrating life with family and friends.

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