Modern History
Background:
● The acquisition of theDiwani of Bengaland the introductionof theDouble Government system by Clive
in 1765became an important building block for theBritish Empire.
● In England, the aspect of this dual governance that attracted chief attention wasthe immense wealth
that the company was expected to derive from the revenues of Bengal,estimated at £4,000,000 per
annum.
● Some, including Pitt, held that thecrown should nowtake over the governmental authority which the
company has now assumed,but this view was held byfew.
● In 1767, the first intervention of parliament in the company affairs came in the form of ademand fora
share of the plunder to the extent of £ 4,00,000 (pound) per annum.
● However,under the dual system, the Nawab was limitedto the position of a figurehead and the
administration was in the hands of the Deputy Nawab,whose was the nominee of the company and an
English resident posted at the Durbar and the used to decide every matter of significance in the
arrangement (Dual Government) a fataldivorce of powerfrom responsibility was inherent which led to
most of the scandals and abuses speedily to their appearances.
○ Theabuses of private tradereached its peak becausethe Indian administrators in this
arrangement were open to illegitimate pressure and unable to restrict the misconduct of the
company's servants.
○ Theongoing demands of the company to increase therevenueeventually resulted in gross
oppression of the peasantry.
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● In 1769, when the company was in debt of about £ 6 million, a dividend of 12.5%was declared,
though the Directors had to conceal facts and falsify accounts. And when the News of the famine in
Bengal in 1770 and Haider Ali's successful onslaught into the Carnatic war reached England.
● In1770 the great famine happened.
● Thecompany's stock showed a spectacular declineandbefore long rumors got abroad of thecompany's
true financial position.
● In sheer desperation, theDirectors of the companyapplied to the Bank of England for a loan of £
1,000,000and while doing so
they signed the death warrant of
the company's independence.
● As this resulted in the
appointment of a select
committee to enquire into the
company's affairswhich was
presided over byGeneral
Burgoynewho while proposing a resolution for theappointment of the committee declared:
○ "The most atrocious abuses that even stained the name of the civil government called for redress…
if by some means sovereignty and law are not separated from trade, India and Great Britain will
suck & overwhelmed never to rise again".
● In 1772, they declared anotherdividend of 12.5%andthey asked the Government for a loan of£ 1
million.The Discrepancy was so glaring that it causedthe House of Commons toappoint a second
(secret) committeeto investigate the reasons forit.
● It became a very debatable and interesting question why should a company go bankrupt when its servants
were returning with their pockets bulging with gold.
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● Consequently, the committee issued its reports. As expected, these were highly condemnatory in nature.
Subsequently, two Acts of Parliament were passed.
○ The first granted the company a loan of £ 140,000 at 4% interest on certain terms and
conditions.
○ While the second was theRegulation Act of 1773.
➢ A lot of opposition came from the East India Company and its supporters.
➢ This act is of great constitutional significance as it was the first move by the British
Government towards the centralization of administration in India and to control and
regulate the affairs of the East India Company.
Why did Britain pass Acts?
● Corruption in company officials and theirhigh incomesleadsto widespread jealousy against them.
● Display of Parliamentary supremacy overEast IndiaCompany.
● On the contrary, East India Company applied for a loan which became a pretext to pass such laws.
● To establish a claim over the cake.
A broad overview of the Acts:
● The initial purpose wasthe centralization of administration.
● Establishment of various administrative institutions like theLegislative Council, Executive Council,
Supreme Court etc.
● Later the acts were made toestablish decentralizationof power.
● Incorporation of nativesinto Governance.
● Introduced theRule of Law and the Procedures for Governance.
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The Company Rule (1773-1858):
Regulating Act of 1773:
● East India Company hadall the shareholders, and the Court of Proprietors were owners of the company.
● There was also a smaller body under the
court of proprietors.
● Features of the Act:The Act remodeled the
constitution of the company both in England
and in India.
● In England:
○ It was provided that theCourt of Directors, hithertoelected every year, was henceforth to be
elected for four years.
○ The number of Directors was fixed at24,out of which1/4th retired every year.
○ This is called Permanent Structure.
○ Also, they were required to lay before thetreasuryall correspondence from India dealing with the
revenues and
○ Before theSecretary of State,everything dealt with civil and military admonition. Thus, for the
first time, the British Cabinet was given the right to control Indian affairs.
● The Act designated theGovernor of Bengal as the 'GovernorGeneral' of Bengaland created an executive
council offour membersto assist him who were notemployees of the company and especially sent from
England.
○ All decisions are by majority but the Governor General will have a casting vote.
○ Thefirst such Governor General was Lord Warren Hastings.
○ The councilorswerePhilip Francis, Claverin, Monson,and Barwell.
○ Francis was anti-Warren Hasting, and Warren Hasting was head of Oudh.
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○ They were to hold office forfive yearsand could be removed earlier only by the king on the
recommendation of theCourt of Directors (Quorum - 3 members).
○ Further, the Governor General in council was vested with thecivil and military government of the
Presidency of Fort William in Bengal (Bengal, Bihar, and Orissa).
○ It madethe Governors of Bombay and Madras presidenciessubordinate to the Governor of
Bengal who were supposed to send reports to revenue, and government.
1773 Original Act:
● “And be it enacted by the authority aforesaid, That in all cases whatsoever wherein any difference of
opinion shall arise upon any question proposed in any consultation, the saidgovernor-general and
council shall be bound and concluded by the opinion and decision of the major part of those
present:and if it shall happen that, by the deathor removal, or by the absence, of any of the
members of the said council, such governor-general and council shall happen to be equally divided; then,
and in every such case, the said governor-general, or in his absence, the eldest counselor present, shall
have a casting voice, and his opinion shall be decisive and conclusive.”
● The Act alsoprohibited the servants of the companyfrom engaging in any private trade or accepting
gifts or bribes from the natives.Thus, laying downthe foundational principle of honest administration.
Also provided liberal salaries.
● The Act for the establishment of aSupreme Court at Calcutta in 1774,to create an independent
judiciary to check the executive.
○ Jurisdiction- Civil, criminal, admiralty and ecclesiasticalmatters.
○ All public servants of the company were answerable to it.
○ AllBritish subjects (European/Indian)could seekredressal against any sort of oppression.
○ Appeal against the decision could be made to the King in Council in England.
➢ Sir Elijah Impey as Chief Justice.
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➢ Chambers, Lemaister, and Hyde as the puisne judges.
Summary:
● The Act was theinitiation of the centralization system.
● It was the first step of the British Parliamentto control and regulate the affairs of the East India
Company.
● It recognized thepolitical as well as the administrative functionsof the East India Company.
● It laid thefoundation of central administration in India.
Amending Act of 1781:
● This Act wasremedial and supplementary in nature.
● This actexempted the actions of the public servantsof the companydone by them in their official
capacity from the jurisdiction of the Supreme Court.
Assessment of the Act of 1773:
● The Act was based on theprinciples of
checks and balances.
● TheRegulating Act of 1773,tried to sail
in an uncharted sea. It left the details of
administration in India to the devices of
the company.
● However, it tried to organize an honest
and efficient supreme authority in Bengal, Madras & Bombay and to protect against the abuse of their
powers by the servants of the company.
● It was a failure and only added to Hasting’s difficulties instead of strengthening him.
● The Act was in operation for 11 years till it wassuperseded by the Pitt’s India Act of 1784.
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Pitt's India Act of 1784:
● Features of the Act:
○ The Actconstituted a department of statein EnglandKnown as the"Board of Control".
Whose special function was to control the political affairs of the Court of Directors.
○ TheAct empowered the Board of Controlto have accessto all the company's papers and its
approval was mandatorywith regards to all the dispatchesthat were not purely commercial, also,
in case of emergency the Board could send its own draft.
○ Thus, theAct placed the civil and military governmentof the company in subordination in
England.
○ ThePresident of the Board of Control was ultimatelyresponsible for the government of
British India.
○ Board of Control members:
➢ Chancellor of Exchequer
➢ Secretary of state
➢ 4 members of the privy council
○ However, the Act allowed theCourt of Directors tomanage the commercial affairs. Thus,
introducing theDual System of governance by the companyand by a parliamentary Board
which lasted till 1858.
○ The Act reduced the number ofmembers of the Executive council to three, of whom the
commander-in-chief was to be one.
○ TheGovernor General Councilhavingpower over subordinatepresidenciesnow included war,
diplomatic relations, and revenue.
○ TheGovernor General Council was made subordinateto the British government.Forbidden to
declare war without prior sanction of theCourt ofDirectors.
○ Introducednon-intervention in Princely statessoas to avoid war.
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○ It also modified the councils ofMadras and Bombayon the pattern of that ofBengal.
● The act was significant mainly for two reasons:
○ The company's territories in India were for the first time called theBritish possessions in India.
○ The British Government was givensupreme control overthe company's affairs and its
administration in India.
The Act of 1786:
● It was meant to bid Cornwallis to accept theGovernorGeneralship of India.
● He wanted to have the power of both the Governor-general and theCommander in chief.
● This Act conceded this demand and also gave the power tooverride the councilin extraordinary cases on
his own responsibility.
The Charter Act of 1793:
● The Act extended the Company’s commercialprivilegesfor another 20 years.
● The company after paying expenses, interest, dividends, and salaries from Indian revenues has to pay an
additional5L poundsto the British govt.
● The power of the Governor-General to override his council was extended to all future Governor
Generals.
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● Senior officialscould not leave India without permission or will be considered as resignations.
● In the Bengal region, there was opium agriculture and they were sold to China illegally.
● The Company could license individual/company’s employees to trade in India. This was called“privilege”
or “country trade”and paved the way for shipmentsof opium to China.
● Indian revenue was to be used to pay home government members.
● This practice continued up to 1919.
● By this Act, therevenue administrationwas separated fromjudiciary functionsand this led to the
disappearance of the Maal adalats.
● All laws relating to the rights of persons and propertybe printed with translations in the Indian
language so that people are aware of their rights and immunities.
● During this timeindustrial growth was evident inBritain.
● Thus, it also facilitated the system of Laissez-faire and Lobbying.
Continental System of Napoleon(1806 -1814):
● It was theforeign policy of Napoleon Bonaparte against the United Kingdomduring the Napoleonic
Wars.
● Between the 1750s to '60s the Industrial Revolution started, and also emerging things likesteam engines,
Power loom sectors, machineriesand because of thisgrowth they weremoving to manufacturing
companies.
● At that time new companies were also arising in Britain and new company owners started lobbying.
● As aresponse to the naval blockade of the Frenchcoastsenacted by the British government on 16
May 1806, Napoleon issued theBerlin Decree on 21November 1806, which brought into effect a
large-scale embargo against British trade.
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The Charter Act of 1813:
● Features:
○ By this Act, themonopoly of trade with India wasabolished.The company could only retain its
monopoly overtea trade and Chinese trading.
○ The Shareholders were givena 10.5% dividend on the revenue of India.
○ Allotted 20 more years to East India Companyto retainIndia and its revenue without detriment
to the sovereignty of the crown.
○ One lakh rupeeswere to be spent on the education of Indians every year.
○ Christian missionarieswere permitted to come andpreach.
○ Separate accounts forcommercial transactionsandterritorial revenues aretobe maintained.
○ Theregulations of the councils of Bombay, Madras,and Calcuttawere now mandated to be put
before the British Parliament.
Before Regulating Act:
Relations With Emperor Shah Alam II:
● The Marathas under Mahadaji Sindhia and Jaswant Rao Holkar had consolidated their position in the
North.
● After overrunning Rajputana, defeating the Jats, and expelling the Rohillas from the Doab, theMarathas
captured Delhi in February 1771.
● The same year theyescorted the Emperorto his thronein Delhi.
● As a reward Emperor handed overAllahabad and Karato them (Clive had given to him in 1765).
● Warren Hastings:
○ stopped the payment of the annual tribute of Rs. 26 lakhs
○ He maintained that the Company did not get the Diwani by the Emperor's declaration but by
power.
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○ sold Allahabad and Kara to the Nawab of Oudh for Rs. 50 lakhs.
Relations With Oudh:
● Clive wanted to keep Oudh as abuffer statefor theterritories of the Company.
● Every year the nawab had asked for the help of the Company's troops without payment of extra expenses
which meant heavy loss to the Company.
● So the relations were veryunsatisfactory and he waslooked upon with suspicion.
● Warren Hastings felt the need of redefine relations with the Nawab of Oudh or alternatively the latter
might join the Marathasfor the partition of Rohilkhandor might even succumb to a Maratha-Rohilla
combination.
● Hastings personally proceeded to Banaras and concluded theTreaty of Banaras (1773) with the Nawab.
● Allahabad was handed over to the Nawab for Rs. 50 lakhs.
● The Nawab agreed to increase the subsidy of the Company's troops from Rs. 30,000 a month to Rs.
2,10,000 a month for one brigade when called for service.
● In case the Nawab asks for the help of the Company's troops against the Rohillas he would pay a
further sum of Rs. 40 lakhs.
The Rohilla War 1774:
● Both the Rohilla Chief and the Nawab of Oudh feared the Maratha attack.
● Early in 1772 the Marathas defeated Zabeta Khan and occupied all his territories of Rohilkhand.
● Hafiz Rehmat Khan, the Rohilla leader feared the Maratha attack and concluded a treaty with the Nawab
of Oudh (17 June 1772) promising to pay40 lakh rupeesto the Nawab for his help in defending
Rohilkhand against possible Maratha attack.
● As expected, the Marathas headed towardsRohilkhand in 1773but retreated when they found EIC + oudh
+ rohillas force.
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● Nawab demanded the promised sum of forty lakhs of rupees from the Rohilla Chief which the latter
evaded.
Feb 1774:
● Nawab of Oudh decided to invade Rohilkhand to annex.
● Feared a Rohilla- Maratha combination against Oudh but for the time being following dissensions in the
Maratha camp after the death of Peshwa Madhav Rao marathas were not the danger Further, the Nawab
had lately won over the Emperor and Zabeta Khan to his side.
● As per the treaty of Banaras, the Nawab sought the help of the Company's troops which were lent against
the Rohillas.
● Rohilkhand was invaded and the decisive battle was fought at Miranpur Kaira (April 1774).
● Hafiz Rehmat Khan died in action.
● Rohilkhand was annexed to Oudh 20,000 Rohillas were banished from the country.
Note:
● Warren Hastings' conduct has been subjectedto severecensure for participation in the Rohilla war
Burke criticized the lending of the Company's troops against the Rohillas who had given no offense to
the Company and spoke of bartering 'the lives and liberties of a free people' to the Nawab of Oudh.
● Macaulay has charged Hastingswith looking on callouslywhile the Rohilla 'villages were burnt, their
children butchered, and their women violated'.
Regulating Act and the Aftermath:
● The new Councillors had a strong prejudice thatWarren Hastings was corrupt and so was the entire
government.
● Franciswas undoubtedly the ablest and the most ambitious. His ambition was to replace Warren
Hastings.
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● New councillors complained of inadequate reception At the very first meeting they wanted to discuss the
past excesses of Warren Hastings' administration
● They demandedall papers pertaining to the transactionwith:
○ The Nawab Wazir of Oudh at Benaras and
○ correspondence with Middleton, the English Resident at Lucknow
○ They wanted to discuss the Company's involvement in theRuhela War.
● Warren Hastings refused to produce the necessary papers,
○ Triumvirate decided the recall of Middleton from Lucknow,
○ Denounced the Ruhela War
○ recall of the Company's troops from Rohilkhand.
● The Triumvirate by virtue of their majority in the Council,
○ Appointed Bristow as the British Resident at Lucknow Concluded a new treaty with the Nawab of
Oudh.
● Treaty of Fyzabad:
○ The new Nawab Asaf-ud-daula was required to increase the monthly subsidy for the use of the
Company's brigade from Rs. 210,000 to Rs. 260,000.
○ cede to the Company in perpetuity the zamindari of Benares.
● Attacked theQuinquennial Settlementof Land Revenue (1772) charged Warren Hastings for having
overestimated the rents that could not be paid by the bidders.
● Francis produced before the Council a plan for aPermanentSettlement of land revenue in Bengal.
● Hastings' creation of new criminal courts of justice was criticized.
● Passed a resolution restoring to the Nawab all the rights of the Nizamat.
● Mohammad Reza Khanwas reinstated as the Naib-Suba.
● Differed with the Governor-General over foreign policy and criticized his interference inthe internal
disputes of the Marathas and interpreted it as his desire to extend the Company's territories.
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● For nearly two years, fromOctober 1774 to September1776the Majority in the Council usurped all
authority.
○ On 25 September1776 Monson died.
○ With only three members left Barwell on his side and his own casting vote,Warren Hastings
regained effective control in the Council.
● The new Councillor,Mr. Wheelerwas due to reach Indiatowards the end of 1777. However,Edward Wheler
was not a man of strong character and there was every fear of his becoming 'the echo of Francis'.
Clavering died on 30 August 1777.Even this did notmark the end of the conflict in the Council.
● Francis continued his opposition to Hastings. The two fought a duel in which Francis was injured by a
pistol shot. The conflict did not end tillFrancis' departure for home in December 1780.
The Trial of Nand Kumar, 1775:
● Conflict in the Council and problems of Warren Hastings and Barwell encouraged Nand Kumar, who had
old grudge against Warren Hastings, to bring some charges of corruption and nepotism against him
● On March 11, 1775,Francis produced a letter fromNand Kumar before the Council which charged Warren
Hastings of having acceptedRs.3.5 lakhs as gratificationfrom Munni Begumfor appointing the latter as
guardian of the minor Nawab, Mubarak-ud-daula.
● Nand Kumar offered to appear before the Council to substantiate.
● Hastings refused to recognize the right of the Council to sit in judgment on him and dissolved the
Council.
● This lent suspicion to the whole case and convinced them about the truth of Nand Kumar's charges.
● The Trio sought the advice of the law officers for the recovery of the amount from Warren Hastings.
○ Meantime, Warren Hastings and his friends planned a counter-offensive against Nand Kumar.
○ Someone brought charges against Nand Kumar for having coerced him to sign a petition containing
various allegations against Hastings and Barwell. It was referred to the SC.
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○ Mohan Prasad, a pleader, acting on behalf of the executor of a banker named Balaki Dass
(deceased) alleged him of forgery.
● On 6 May, 1775,Nand Kumar was arrested for forgeryand hanged by a majority decision of a
European jury.
● Critics of Warren Hastings and Impey have described the trial and execution of Nand Kumar as "a judicial
murder" and have accused Warren Hastings and Impey to have acted in collusion.
● Macaulay believed that Warren Hastings was the real prosecutor and wrotethat 'only idiots and
biographers doubt that Warren Hastings was not the real prosecutor".
● One, however, cannot escape the conclusion that Nand Kumar was punished on weak evidence and the
temper of the Chief Justice-Impey a close friend ofWarren Hastings - played the decisive part.
● The law of England provided for capital punishment for forgery, but the same law had never been applied
in Calcutta.
● The punishment accorded to Nand Kumar was excessive and even unjust because no Indian law prescribed
the death penalty for forgery.
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