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

Have you ever wondered, “How the trading East India Company emerged as the colonial power in India? OR How did the colonial rule that started from the East India Company transformed or rather went onto becoming Crown Rule?” The present discussion focuses to throw light on answers to these questions and analyse the Charter Act from 1773 to 1853 that was introduced under Company Rule.

Background of Company Rule:

Back in the year 1600, the British syndicated East India Company acquired a royal charter from the ruler of England, Queen Elizabeth-I that provided it monopolistic rights of trade with the Eastern countries. Although attained exclusive rights from Britain, the Company can’t prohibit other foreign countries to enter Indian markets on the name of the charter and therefore, it resorted to malign practices to eliminate competition in business. Thereafter, step by step, it asserted control over Bengal after the Battle of Plassey 1757; achieved Diwani rights ( i.e. revenue collection rights over Bengal, Bihar and Odisha) after the Treaty of Allahabad 1765 and emerged as a supreme political power in India by the middle 18th century. But, paradoxically, the company experienced serious financial collapse by the 1770s due to corrupt and unaccountable company officials who were often referred to as nabobs– an anglicized form of the nawab.

Under such a massive financial deficit, the Company sought help from the British Parliamentary Government who realized it necessary to keep an eye on the inherent functioning of the company and therefore, they introduced abundant regulations to generate discipline in the company officers that were popularly referred to as Charter Acts. Let’s learn about them in detail:

Regulating Act/ Charter Act (1773):

Charter Act 1773

Based on the report of then-British Prime Minister Lord North, the Charter Act 1773 was an initiative by the British Parliament to regulate the internal and external affairs of the Company. The British Government also recognized the Company’s functioning as an administrative and political entity in India and framed the following provisions to exert autonomy over and to develop discipline and accountability in East India Company:

Governance under the British Parliamentary Government–The 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 submit annual 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 this regulation, the legislative powers were started to be centralized in Bengal and therefore Governor of Bengal was called Governor-General of Bengal and the first Governor-General of Bengal was Warren Hastings. A 4-membered executive committee called Governor-General in Council was also recruited to guide and assist Governor-General.
A Supreme Court was established for the first time in India in Fort Williams Calcutta for judicial investigation and redressal of public grievances. The first Chief Justice of the Supreme Court was Sir Elijah Impey.
The Charter strictly prohibited the company officers, judges and governors to accept the pecuniary benefits, gifts and bribes from Indian princes in any manner.

This Charter Act 1773 has undeniably a considerable significance in Indian history because it initiated the process of central colonial legislation in India but it couldn’t effectively regulate the company affairs since Supreme Court’s and Governor-General In Council’s powers was not well-specified and therefore, it couldn’t eliminate corruption and needed to be amended in 1781.

Amending Act/ Settlement Act (1781):

Settlement Act 1781

The Settlement Act was introduced to rectify the loopholes of the Charter Act 1773 and it outlined the following provisions:

Amendment of Jurisdiction of Supreme Court-Under this enactment, the Supreme Court’s geographical jurisdiction was confined to Calcutta only and the appellate jurisdiction was shifted from Supreme Court to Governor-General in Council. In this way, the judicial and executive powers were separated.
It also stated that Hindu laws should be applied on Hindu cases while Quranic laws on Muslim cases.

Pitts India Act (1784):

Pitts India Act 1784

It was named after Pitts the Younger, the British Prime Minister who introduced this 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: By the provisions, a 6-membered committee called the Board of Control was established that broadly represents British Government and includes the Chancellor of Exchequer, the Secretary of State and 4 members of the Privy Council. The commercial/financial and political powers were bifurcated between the 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.

Charter Act (1793):

Charter Act 1793

Elevation of Indian revenue: This act provisioned for the elevation of Indian revenue so that salaries of the 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 that outlined the following legislations:

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 the propagation of Christianity.
Educational Enrichment in India: The Britishers allotted Rs. 1 lakh for enriching the Indian Educational System and encouraging scientific knowledge amongst natives of the country.
Defined separation of commercial transactions and revenue administration between the Board of Control and Court of Directors

Charter Act or St Helena Act 1833:

Complete Centralization of legislative powers in Bengal: Under this enactment, the legislative powers were entirely centralized in Bengal and 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’s functionality completely reduced to an administrative entity since its trading monopoly including Trade in Tea and Trade with China were ended.
Addition of law member in Governor-General In Council 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 which hastened the process of eradication of the Company at large.
Empowered Governor-General to veto a decision in Imperial Legislative Council.
EIC was 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.[ 1^st Indian in Civil Services: Satyendranath Tagore in 1863.]

Summing up the intention of introduction of these Acts, we can broadly comprehend that British Parliamentary Government was the 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.

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