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Indian History

The Company Rule in India (1773-1858)

  • 05 Oct 2021
  • 11 min read


  • 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.

Reforms under the Governors-General during the Company Rule

  • Lord Cornwallis (governor-general, 1786-93): He was the first to bring into existence and organise the civil services.
    • He abolished the District Fauzdari Courts and established circuit courts at Calcutta, Dacca, Murshidabad and Patna.
    • Cornwallis Code: Under this code:
      • There was a separation of revenue and justice administration.
      • European subjects were also brought under jurisdiction.
      • Government officials were answerable to the civil courts for actions done in their official capacity.
      • The principle of sovereignty of law was established.
  • William Bentinck (governor-general 1828-1833): He abolished the four Circuit Courts and transferred their functions to the Collectors.
    • Established a Sadar Diwani Adalat and a Sadar Nizamat Adalat at Allahabad for the convenience of the people of Upper Provinces.
    • The English language replaced Persian as the official language of courts.
      • Also, the suitor was now provided the option to use Persian or a vernacular language in courts.
    • A Civil Procedure Code (1859), an Indian Penal Code (1860) and a Criminal Procedure Code (1861) were prepared as a result of the codification of laws.
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