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This article is written by Aditi Srivastava of Law School, BHU (Banaras Hindu University). In this article, Aditi discusses the Regulating Act, 1773 and the Act of Settlement, 1781.

A brief introduction

The Enactment of the Regulating Act of 1773 and the Act of Settlement were two major enactments in the Indian Legal History. The Regulating Act of 1773 was the first Act to bring in major changes in the administration and justice. then, late on, the Act of Settlement in the year 1781, was enacted to remove the flaws of the earlier passed Act.

The Regulating Act, 1773

Why the need for the enactment of the Regulating Act emerged?

There were many circumstances that made it necessary for the enactment of the act. It was the first direct interference of the British Government in the regulation of the affairs of the East India Company.

  • Firstly, the concept of the dual form of administration instituted by Robert Clive was complicated and brought trouble to the people of India. Under this system, the company had Diwani rights in Bengal and the Nawab had Nizamat rights (judicial and policing rights). Behind the curtains, Nizamat rights were also in the hands of Company as the Nawab acted as an agent of the company. This all only laid to the suffering of the people as they were being exploited by both the Nawabs and the Company.
  • Secondly, the plight of the people was when there was a terrible famine in Bengal where a huge population perished.
  • Thirdly, a major reason for the enactment of this Act was the financial crisis that arose in the company by 1773 and the company had asked for a loan of one million pounds from the British Government in the year 1772.
  • Fourthly, the company through earlier charter had only been given trading rights by the British Parliament. But, slowly and slowly, as it started acquiring more and more territory it started acting like a ruling body. And, there in England, the British Parliament couldn’t swallow this situation. And, to put end to this tendency of company i.e. using the political powers in the name of trading rights, the company thought it was necessary that these territories should be brought under the control of Crown.
  • At, that time there existed three presidencies of Bengal, Madras, and Bombay in the country. But, all these three towns were independent of each other and there no centralized authority in India to control them. Thus, it became necessary to bring uniformity in the administration of these three towns.

These all circumstances forced the British government to pass the Regulating Act of 1773 in order to regulate the affairs of British East India Company.

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And, accordingly, Lord North(Prime Minister of England at that time) decided to revamp the affairs of the East India Company with the Regulating Act. And, so in May 1773 Lord North presented a bill in the British Parliament which when passed was known as ‘Regulating Act of 1773 ‘. An interesting point to note here is that by this act the, British Parliament only ‘regulated’ the affairs of the company but, didn’t take all power completely to itself.

The Aim of the Act

The basic objectives of implementing the Regulating Act of 1773 are listed below.

  • To control and regulate the affairs of East India Company
  • To remove the political power from the hands of the Trading Company
  • To recognize the political and administrative power of the Company
  • To provide new administrative reforms which were to provide a Central Administration System
  • To improve the despotic state of affairs (situation) of the company
  • To sort out the chaos created by the introduction of the system of dual government
  • To bring anti-corruption practices via the medium of the act by prohibiting the servants of the company, from engaging in any form of private trade and from accepting bribes, gifts, and presents from the people
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Key Provisions of the Act (Major features)

This was the first step taken by the British Parliament to interfere in the administration of the company, directly. The key features of the have described in the following paragraphs.

  • Introduction of the office of the Governor-General of Bengal

The office of the  Governor of Bengal was redesignated as the Office of the Governor of the Presidency of Fort William, also known as Governor-General of Bengal. Lord Warren Hastings was the first person to hold this designation.

  • Creation of Executive Council to Assist the Governor-General

Also, the Executive Council of four members was created to assist the Governor-General.

  • Governors of Bombay and Madras presidencies subordinate to the Governor-general of Bengal

The Governors of Bombay and Madras were made subordinate to the Governor General of Bengal, thereby making the Governor General of Bengal as the ultimate authority.

  • Establishment of the Supreme Court at Judicature at Fort William

In the year 1774, Supreme Court of Judicature at Fort William was established at Calcutta with one Chief Justice and three other judges. The jurisdiction of this court extended to all areas lying under the Bombay, Madras and Bengal Presidency. It was a Court of Record and its power extended to try both Civil, Criminal cases (only over the British subjects not on natives) as well as it had jurisdiction over admiralty cases. Judges were to come from England. The first Chief Justice of the court was Sir Elijah Impey.

  • Reforms to curb corruptions

This act brought prohibition on the servants of the company from engaging in any private trade or accepting bribes and gift from the local people.

  • The directors of the company were to be elected for a period of five years and one-fourth of them used to retire every year. There was no procedure for re-election available.

The Contribution of the Act to Indian Legal History (Impacts)

  1. This enactment is considered to be a landmark enactment as it brought a lot of dynamic and significant changes in the structure of judiciary in the country.  
  2. The act brought changes some important changes in  the Constitution of Court of Directors (COD)
  3. For the first time, the political and administrative functions of the company were recognized.
  4. This act also laid down the foundation of the Central Administration in the country.
  5. This act created for the first time the Supreme Court at Calcutta thereby, making a proper judicial system and Judiciary got regulated to an extent and for the first time learned judges from England were made part of the Supreme Court in India.

Drawbacks of the Act

Though the act is considered to be a very significant one in the Indian legal history, still there was a lacuna left behind as the act failed to resolve the issues prevailing at that time in the legal system. The major drawbacks of the Act are listed below.

  1. The situation was a paradoxical situation for the Governor-General had no veto power and the Governor-General was made answerable to the Directors and was held responsible for all the acts related to the administration in India. But, the Governor-General had no free hand to give an independent decision as he was bound by the decision of the majority decision of the council. Because of this situation, the council used the Governor-General as the puppet to make their decision.
  2. Though the Governors were subordinate to the GG in actual practice, led to the ultimate power in the hands of the Governor and his subordinates resulting in widespread corruption and weakening of the administration at lower levels.
  3. There was a lot of confusion regarding the powers and jurisdiction of the Supreme Court. Also, there was ambiguity between the jurisdiction of the Supreme Court and that of the Council of the Governor-General.
  4. Also, the Act failed to address the concerns of the Indian natives who were the actual sufferers.

The Act of Settlement

The Act of Settlement was an Amending Act of 1781, which was passed by British Parliament on 5th July 1781 to remove the defects of the Regulating Act 1773. It is also known as Declaratory Act, 1781.

Circumstances that led to the passing of Act of Settlement

  • Though the Regulating Act of 1773, brought a great level of change both in the regulation of affairs and judiciary, there were some significant loopholes which this act failed to resolve. Basically, to remove the defects of the Regulating act of 1773, the Act of Settlement  1781 was enacted.
  • Firstly, some serious issues with the administration of the Warren Hastings were there. The relevant examples of such issues are Patna case, Cosijurah Case and particularly the Nand Kumar case where (Nand Kumar was hanged). These all issues let to a lot of criticisms of administration of Warren Hastings.
  • Secondly, there was a big tussle between the Supreme Court and Governor-General in Council which disturbed the balance of administration to a great extent.
  • Also, there was interference in the personal laws of the communities which had agitated the people.

Also, in the year 1777, a complaint was made by the directors of the company against the Supreme Court as for them it was difficult to run the administration. To address this complaint, the House of Commons, appointed a committee known as Touchet Committee to a do an inquiry about the administration of Bengal, Bihar, and Odisha.

The report of this committee led to the enactment of the Act of Settlement of 1781.

The Aim of the Act

The main objectives of the enactment of this Act were :

  1. To remove ambiguity regarding the few provisions of the Regulating Act and the Charter which had created the division between the court and the government.
  2. To support the lawful government of Bengal, Bihar, and Orissa, so that revenue could be collected smoothly.
  3. To maintain and protect the laws and customs of the native people.

Key Provisions (features) of the Act

The Act had the following features :

  • Change in the powers of the Supreme Court

The servants of the company which earlier came within the jurisdiction of the Supreme Court were now exempted from the jurisdiction of the Supreme Court.

By the enactment of this Act, the court’s geographical jurisdiction became limited to only Calcutta.

  • Non-interference in Revenue matters

The court now had no jurisdiction in the revenue matters concerning revenue, or any act was done in the collection thereof, the government now became independent of the control of the court in the matter of revenue.

  • The Shift of Appellate Jurisdiction from Court to the Governor-General and Council

The Appellate jurisdiction shifted in the hands of the Governor-General and Council. Now, the appeals went from Provincial Courts to the Governor-General in council.

  • The Assertion on the application of the personal laws

This act asserted that Mohammedan law should be applied on the Mohammedan cases and similarly, the Hindu law must be applied to Hindu cases.

Impacts of the Act of the Settlement

The major impacts of this act were :

  • The act gave superior authority to the council over the court and favored the council.
  • This act made the position of the council very strong so that it could continue to have a good control over the Indian empire.
  • It was the first attempt to separate the executive from the judiciary by defining the respective areas of jurisdiction.

Still, the Act failed to give a vibrant impact and to remove all the flaws of the Regulating Act of 1773.


These to enactment brought many great changes to the system of administration and can also be concluded that the Regulating Act of 1773 laid the foundation of the Central Administration and Parliamentary Control. But, there were also some drawbacks to both the acts which can’t be ignored.

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  1. Could you highlight on this in detail,vis-a-vis why was Nandakumar was hanged.
    “Firstly, some serious issues with the administration of the Warren Hastings were there. The relevant examples of such issues are Patna case, Cosijurah Case and particularly the Nand Kumar case where (NandKumar was hanged). These all issues let to a lot of criticisms of administration of Warren Hastings”


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