Company Rule (1773-1858) – UPSC Notes – Indian Polity

Evolution of British East India Company Rule in India: From Traders to Sovereigns

The term “Company Rule” refers to the governance of India by the British East India Company. Commencing as traders in 1757, the British established the British East India Company to facilitate commerce between India and Britain. As their trade ventures expanded across India, the Company progressively engaged in political affairs, gradually extending its influence and eventually establishing British sovereignty over the entire Indian subcontinent. This article offers a thorough exploration of the historical development of Company Rule in India, detailing its evolution from a trading entity to a governing force.

Company Rule (1773-1858) and Direct Governance

The time called “Company Rule” from 1773 to 1858 was a big part of India’s history. It was when the British Parliament made many rules to control what the East India Company (EIC) did. But in 1858, things changed because of the Sepoy Mutiny. After that, the British Parliament took direct control of India.

Company Rule in India (1773-1858): Changes, Control, and the Start of Independence

The British Company Rule persisted for almost a century, from 1773 to 1858. Afterward, India shifted to direct governance by the Queen of England, known as Crown Rule. The Company Rule triggered widespread uprisings across India, leading to a significant push for independence.

Upon attaining “diwan” status in Bengal, the Company gradually supplanted local Nizam rule with its administration. This article provides an overview of the pivotal period of Company Rule in India.

Company Rule: A Timeline of Important Events

• Established: 1773
• Revoked: 1858
• Before: Mughal Empire
• After: British Crown Rule

Regulating Act 1773: Setting the Stage for Company Rule in India & Legal Changes

The Company Retains Possessions Act empowered the East India Company to control its lands in India and set rules for its actions. This law was a significant step as it allowed the British cabinet to oversee Indian matters.

It established the role of the “Governor-General of Bengal,” with Warren Hastings as the inaugural appointee, along with a council of four members managing Bengal. The Act also made the Governors of Bombay and Madras answerable to the Governor-General of Bengal.

A crucial development was the establishment of a Supreme Court in Bengal (Calcutta), with appellate jurisdiction for legal matters. The court comprised one chief justice and three other judges.

In 1781, the Act underwent an amendment, providing immunity to the Governor-General, the Council, and government officials from legal actions for duties performed officially. This contributed to the foundation of Company Rule in India.

Pitt’s India Act 1784 and the Beginning of Dual Governance in Company Rule

• Introduction of Dual Control System:
  • The act established a unique way of governance, with shared control between the British government and the East India Company.
• Transformation of the Company:
  • Under this new system, the East India Company transformed into a governmental branch.
  • Its territories in India were reclassified as ‘British possessions,’ while retaining control over trade and day-to-day administration.
• Establishment of Oversight Bodies:
  • The act led to the creation of two important bodies:
    • The Board of Control, responsible for managing civil, military, and revenue affairs, composed of the Chancellor of the Exchequer, a Secretary of State, and four Privy Council members appointed by the Crown.
    • A secret committee of three directors, part of the Court of Directors, handled critical political matters and maintained direct communication with the British government.
• Governor-General and Commander-in-Chief:
  • The council of the governor-general was streamlined to three members, including the commander-in-chief.
  • In 1786, Lord Cornwallis assumed dual roles as both the governor-general and commander-in-chief, granting him the authority to override council decisions if he accepted responsibility.
  • This governance model set the foundation for the subsequent era of Company Rule.

Charter Act 1793: Strengthening the Governor-General’s Role and Shaping Company Rule in British India

Empowerment of Governor-General:

• This act increased the authority of Lord Cornwallis, giving all future Governor-Generals and Governors of Presidencies similar overriding powers over their councils.

Official Appointments Under Royal Scrutiny:

• It became necessary for the appointment of the governor-general, governors, and the commander-in-chief to receive approval from the royal authority.

Restrictions on Senior Officials:

• Senior officials of the East India Company were not allowed to leave India without official permission, and doing so would be considered equivalent to resigning from their positions.

Financial Provisions:

• As part of the broader Company Rule, the law stated that the Board of Control members and their staff would be funded from Indian revenues, a practice lasting until 1919.
• Additionally, the East India Company had to make an annual payment of 5 lakh pounds to the British government after covering essential expenses.

Charter Act 1813: Changing Trade Dynamics and Starting Company Rule in India

English Traders’ Request:

• English traders demanded a share in India’s trade because they suffered losses due to Napoleon Bonaparte’s Continental System, aimed at hurting England’s commercial interests.

End of Company Monopoly:

• In response to these demands, the East India Company lost its exclusive control over trade.
• The law emphasized the clear authority of the Crown over the Company’s possessions, shaping the course of Company Rule.

Trade Monopoly Exceptions:

• Despite the changes, the Company retained its trade monopoly with China and in the tea trade.

Support for Indian Education:

• An annual sum of Rs.1,00,000 was set aside to promote literature, encourage educated Indians, and advance scientific knowledge among the Indian population.
• This marked an initial step toward recognizing the government’s role in education.

Charter Act 1833: Company Rule and India’s Evolution

Company’s Trade Situation:

• The 20-year lease granted to the Company in 1813 for territory possession and revenue collection was extended.
• However, the Company’s trade monopoly with China and tea came to an end.

European Immigration Freed:

• All restrictions on European immigration and property acquisition in India were lifted, allowing extensive European colonization.

Introduction of Governor-General of India:

• The title of “Governor-General of Bengal” changed to “Governor-General of India.”
• This empowered position oversaw all civil and military affairs, controlled revenue collection, and had full authority over expenditures. William Bentinck became the first Governor-General of India.

Law Commission Established:

• The legislation set up the Law Commission to consolidate and codify Indian laws.
• A fourth ordinary Member specializing in lawmaking was added to the Governor-General’s Council for India. Lord Macaulay became the first appointee to this role.

Evolution under Charter Act 1853: Company Rule in Transition

Company’s Trade Situation:

• The Company maintained control over its territories unless directed otherwise by Parliament.

Overhaul of Services:

• The Company’s influence over government positions was abolished, and entry into these roles was now determined through competitive exams.

Expansion of the Executive Council:

• The law member gained full membership in the governor-general’s executive council.

Indian Legislative Council:

• Local representation was introduced in the Indian legislature, named the Indian Legislative Council.

Governor-General’s Veto Power:

• However, the approval of the governor-general was required for a law to be enacted, granting the authority to veto any legislative council bill.

Government of India Act 1858 and the End of Company Rule

Impact of the 1857 Revolt:

• The 1857 Revolt exposed the East India Company’s limitations in handling complex situations.

End of Company Rule:

• This uprising prompted demands to remove the Company’s authority over Indian territories.
• As a result, the dual system established by Pitt’s India Act ended, and India was now to be governed in the name of the Crown.
• Governance was carried out through a Secretary of State and a council of 15, although this council played an advisory role.

Introduction of the Viceroy:

• The title “Governor-General of India” was replaced by “Viceroy,” elevating the prestige of the position, though not its authority.
• The Viceroy was directly appointed by the British government, with Lord Canning becoming the first Viceroy of India.

Reforms During the Rule of Governors-General in the Company Rule

Lord Cornwallis (1786-93):

• Serving as the inaugural Governor-General, Lord Cornwallis implemented significant changes in the civil services.
• He abolished the District Faujdari Courts and established circuit courts in Calcutta, Dacca, Murshidabad, and Patna.
• Cornwallis introduced the Cornwallis Code, which separated revenue and justice administration.
• The jurisdiction was extended to European subjects, and government officials were made accountable in civil courts for their official actions.
• This period laid the groundwork for the principle of the rule of law.

William Bentinck (1828-1833):

• Governor-General Bentinck continued the reforms by abolishing the four Circuit Courts and transferring their functions to the Collectors.
• He established a Sadar Diwani Adalat and a Sadar Nizamat Adalat in Allahabad to serve the people of the Upper Provinces.
• Under his rule, English replaced Persian as the official language in courts, and litigants were given the choice to use either Persian or a vernacular language in court proceedings.
• The codification of laws during this period led to the development of the Civil Procedure Code (1859), Indian Penal Code (1860), and Criminal Procedure Code (1861).

FAQs on Company Rule

1. What is the significance of the term “Company Rule” in Indian history?

• Answer: The term “Company Rule” refers to the period from 1773 to 1858 when the British East India Company transitioned from being a trading entity to a governing force, eventually establishing British sovereignty over India.

2. When did Company Rule officially commence in India, and when was it revoked?

• Answer: Company Rule officially began in 1773 and was revoked in 1858.

3. How did the Regulating Act of 1773 contribute to the establishment of Company Rule in India?

• Answer: The Regulating Act of 1773 set the stage for Company Rule by empowering the East India Company to control its lands, establishing the Governor-General of Bengal, and creating a Supreme Court in Bengal. It marked a significant step towards the foundation of Company Rule.

4. What was the Dual Control System introduced by Pitt’s India Act of 1784, and how did it shape Company Rule?

• Answer: Pitt’s India Act of 1784 introduced a Dual Control System, sharing governance between the British government and the East India Company. This transformed the Company into a governmental branch, laying the foundation for the subsequent era of Company Rule.

5. How did the Charter Act of 1793 strengthen the role of the Governor-General in Company Rule?

• Answer: The Charter Act of 1793 increased the authority of the Governor-General, granting overriding powers over councils. It also introduced official appointments under royal scrutiny and imposed financial provisions funded from Indian revenues.

6. What changes did the Charter Act of 1833 bring about in Company Rule, especially regarding trade dynamics?

• Answer: The Charter Act of 1833 marked the end of the Company’s trade monopoly with China and tea. It extended the Company’s lease granted in 1813, allowed unrestricted European immigration, and introduced the title “Governor-General of India.”

7. How did the Government of India Act in 1858 mark the end of Company Rule, and what governance structure replaced it?

• Answer: The 1858 Act marked the end of Company Rule due to the 1857 Revolt. Governance shifted from the East India Company to the Crown, carried out through a Secretary of State and a council of 15, although the council played an advisory role.

8. What reforms were implemented by Lord Cornwallis during his tenure as Governor-General in the Company Rule?

• Answer: Lord Cornwallis implemented significant reforms, including the abolition of District Faujdari Courts, establishment of circuit courts, and introduction of the Cornwallis Code, laying the groundwork for the principle of the rule of law.

9. What changes were introduced by William Bentinck during his rule as Governor-General in the Company Rule?

• Answer: Governor-General Bentinck abolished Circuit Courts, established Sadar Diwani Adalat and Sadar Nizamat Adalat, replaced Persian with English as the official language, and initiated the codification of laws, contributing to the development of key legal codes.

10. What led to the end of the Company’s authority over Indian territories and the establishment of the Viceroy during the Company Rule?

• Answer: The 1857 Revolt exposed the East India Company’s limitations, leading to the end of its authority. The Viceroy was introduced as the new title, directly appointed by the British government, marking the shift from Company Rule to Crown governance.

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