India under the English East India Company – Modern Indian History Notes Part 1

The English East India Company was established on 31 December 1600 as per the Royal Charter issued by the Queen of England, Elizabeth I.

The English East India Company

  • The Company had sent Captain Hawkins to the court of the Mughal Emperor, Jahangir in 1608 to secure permission to establish a “factory” (storehouse of goods) at Surat

  • It was turned down initially

  • However, in 1613, Jahangir issued the firman permitting the East India Company to establish its first trading post at Surat.

  • Accordingly, the English set up business centres at Agra, Ahmedabad and Broach

  • In 1639, Francis Day established the city of Madras and constructed the Fort St. George.

  • On the west coast, the Company obtained Bombay on lease from their King, Charles II for a rent of 10 pounds per annum in 1668.

  • By the year 1690, Job Charnock, the agent of the East India Company purchased three villages namely, Sutanuti, Govindpur and Kalikatta, which, in course of time, grew into the city of Calcutta.

  • After the Battle of Plassey in 1757and the Battle of Buxar in 1764, the Company became a political power.

  • India was under the East India Company’s rule till 1858 when it came under the direct administration of the British Crown.

  • Robert Clive was the first Governor of Fort William under the Company’s rule


In 1772, the Company appointed Warren Hastings as the Governor of Fort William

Reforms of Warren Hastings

Abolition of the Dual System

  • The East India Company decided to act as Diwan and to undertake the collection of revenue by its own agents.

  • Hence, the Dual System introduced by Robert Clive was abolished

  • Warren Hastings reduced the Nawab’s allowance of 32 lakhs of rupees to half that amount

  • He also stopped the annual payment of 26 lakhs given to the Mughal Emperor

  • Board of Revenue was established at Calcutta to supervise the collection of revenue.

  • English Collectors were appointed in each district.

  • The treasury was removed from Murshidabad to Calcutta and an Accountant General was appointed

  • Calcutta thus became the capital of Bengal in 1772and shortly after of British India

  • The Board of Revenue farmed out the lands by auction for a period of five years instead of one year in order to find out their real value.

  • Yet, the system was a failure. Many zamindars defaulted and the arrears of revenue accumulated.

The reorganisation of the Judicial System

  • The judicial system at the time of Warren Hastings’ ascendancy was a store-house of abuses.

  • The Nawab who was hitherto the chief administrator of justice misused his powers.

  • The zamindars who acted as judges at lower levels within their own areas were highly corrupt and prejudiced

  • Each district was provided with a civil court Under the Collector A criminal court under an Indian Judge

  • To hear appeals from the district courts two appellate courts, one for civil cases and another for criminal cases, were established at Calcutta

  • The highest civil court of appeal was called Sadar Diwani Adalat,

  • Which was to be presided over by the Governor and two judges recruited from among the members of his council.

  • Similarly, the highest appellate criminal court was known as Sadar Nizamat Adalat

  • Which was to function under an Indian judge appointed by the Governor-in-Council

  • Experts in Hindu and Muslim laws were provided to assist the judges.

  • An English translation of it – Code of Hindu Laws – was prepared by Halhed.

Trade Regulations and Other Reforms

  • Warren Hastings abolished the system of dastaks, or free passes and regulated the internal trade.

  • He reduced the number of custom houses and enforced a uniform tariff of 2.5 per cent for Indian and non-Indian goods

  • Weavers were given better treatment and facilities were made to improve their condition.

  • He also introduced a uniform system of pre-paid postage system.

  • A bank was started in Calcutta.

The Regulating Act of 1773 (Background)

  • The Regulating Act of 1773 opened a new chapter in the constitutional history of the Company.

  • Previously, the Home government in England consisted of the Court of Directors and the Court of Proprietors.

  • The Court of Directors were elected annually and practically managed the affairs of the Company

  • In India, each of the three presidencies was independent and responsible only to the Home Government.

  • The government of the presidency was conducted by a Governor and a Council

  • The following conditions invited the Parliamentary intervention in the Company’s affairs.

  • The English East India Company became a territorial power when it acquired a wide dominion in India and also the Diwani rights.

  • The disastrous famine which broke out in Bengal in 1770 affected the agriculturists. As a result, the revenue collection was poor

  • In short, the Company was on the brink of bankruptcy. In 1773, the Company approached the British government for an immediate loan.

  • Under these circumstances that the Parliament of England resolved to regulate the affairs of the Company.

  • Lord North, the Prime Minister of England, appointed a select committee to inquire into the affairs of the Company.

  • The report submitted by the Committee paved the way for the enactment of the Regulating Act.

Provisions of the Act

  • The term of office of the members of the Court of Directors was extended from one year to four years. One-fourth of them were to retire every year and the retiring Directors were not eligible for re-election.

  • The Governor of Bengal was styled the Governor-General of Fort William whose tenure of office was for a period of five years.

  • The Governor-General in Council was made supreme over the other Presidencies in matters of war and peace

  • The provision was made in the Act for the establishment of a Supreme Court at Calcutta consisting of a Chief Justice and three junior judges. It was to be independent of the Governor-general in Council.

  • In 1774, the Supreme Court was established by a Royal Charter

  • This Act prevented the servants of the Company including the Governor-General, members of his council and the judges of the Supreme Court from receiving directly or indirectly any gifts in kind or cash.

  • The significance of the Regulating Act is that it brought the affairs of the Company under the control of the Parliament.

  • The greatest merit of this Act is that it put an end to the arbitrary rule of the Company

  • Provided a framework for all future enactments relating to the governing of India.

  • The main defect of the Act was that the Governor-General was made powerless

  • Because the council which was given supreme power often created deadlocks by over-ruling his decision

  • However, many of these defects were rectified by the Pitt’s India Act of 1784.

Expansionist Policy of Warren Hastings

  • Warren Hastings was known for his expansionist policy. His administration witnessed the Rohilla War,

  • The First Anglo-Maratha War and the Second Anglo-Mysore War.

The Rohilla War (1774)

  • Rohilkand was a small kingdom situated in between Oudh and the Marathas.

  • Its ruler was Hafiz Rahmat Khan

  • He concluded a defensive treaty in 1772 with the Nawab of Oudh fearing an attack by the Marathas.

  • But no such attack took place. But, the Nawab demanded money.

  • When Rahmat Khan evaded, the Nawab with the help of the British invaded Rohilkand

  • Warren Hastings, who sent the British troops against Rohilkand was severely criticised for his policy on Rohilla affair

First Anglo-Maratha War (1775-82)

  • The Marathas largely remained disunited since the Third Battle of Panipat (1761). 

  • The internal conflict among the Marathas was best utilized by the British in their expansionist policy.

  • In 1775, there was a dispute for the post of Peshwa between Madhav Rao and his uncle Raghunatha Rao.

  • The British authorities in Bombay concluded the Treaty of Surat with Raghunatha Rao in March 1775.

  • Raghunatha Rao promised to cede Bassein and Salsette to the British but later when he was unwilling to fulfil his promise, the British captured them.

  • This action of the Bombay Government was not approved by Warren Hastings. In 1776, Warren Hastings sent Colonel Upton to settle the issue

  • He cancelled the Treaty of Surat and concluded the Treaty of Purander with Nana Fadnavis, another Maratha leader

  • According to this treaty, Madhava Rao II was accepted as the new Peshwa and the British retained Salsette along with a heavy war indemnity

  • However, the Home authorities rejected the Treaty of Purander. Warren Hastings also considered the Treaty of Purandar as a ‘scrap of paper’

  • In 1781, Warren Hastings dispatched British troops under the command of Captain Popham. He defeated the Maratha chief, Mahadaji Scindia, in a number of small battles and captured Gwalior.

  • Later in May 1782, the Treaty of Salbai was signed between Warren Hastings and Mahadaji Scindia

  • Accordingly, Salsette and Bassein were given to the British.

  • Raghunath Rao was pensioned off and Madhav Rao II was accepted as the Peshwa.

  • The Treaty of Salbai established the British influence in Indian politics

  • It provided the British twenty years of peace with the Marathas

  • The Treaty also enabled the British to exert pressure on Mysore with the help of the Marathas in recovering their territories from Haider Ali.

  • Thus, the British, on the one hand, saved themselves from the combined opposition of Indian powers and on the other, succeeded in dividing the Indian powers.

The Second Anglo-Mysore War (1780-84)

  • The first Anglo-Mysore War took place in 1767-69.

  • Haider Ali emerged victorious against the British and at the end of the War a defensive treaty was concluded between Haider Ali and the British.

  • After eleven years, the Second Mysore War broke out

The main causes for the second Anglo-Mysore War were:

  • The British failed to fulfil the terms of the defensive treaty with Haider when he was attacked by the Marathas in 1771

  • There was an outbreak of hostilities between the English and the French (an ally of Haider) during the American War of Independence

  • The British captured Mahe, a French settlement within Haider’s territories

  • Haider Ali formed a grand alliance with the Nizam of Hyderabad and the Marathas against the British in 1779.

  • The War began when the British led their forces through

  • Haider’s territory without his permission to capture Guntur in the Northern Sarkars.

  • Haider Ali defeated Colonel Baillie and captured Arcot in 1780.

  • In the next year, Warren Hastings, by a clever stroke of diplomacy, divided the Confederacy.

  • He made peace with the Nizam, won the friendship of Bhonsle and came to an understanding with the Scindia (both Marathas)

  • Consequently, Haider was isolated without any alliance.

  • He was defeated by Sir Eyre Coote at Porto Novo in March 1781.

  • In December 1782, Haider died of cancer at the age of sixty and his death was kept secret till his son Tipu Sultan assumed power.

  • The Second Mysore War came to an end by the Treaty of Mangalore in 1783.

Pitt’s India Act, 1784

  • The Regulating Act proved to be an unsatisfactory document as it failed in its objective

  • In January 1784, Pitt the Younger (who became Prime Minister of England after the General Elections) introduced the India Bill in the British Parliament.

  • It received royal assent in August 1784. This was the famous Pitt’s India Act of 1784.

Main Provisions

  • Board of Control consisting of six members was created. They were appointed by the Crown

  • The Court of Directors was retained without any alteration in its composition.

  • The Act also introduced significant changes in the Indian administration. It reduced the number of the members of the Governor-General’s Council from four to three including the Commander-in-Chief.

  • The Court of Directors controlled its commercial functions, whereas the Board of Control maintained its political affairs.

  • In fact, the Board represented the King, and the Directors symbolised the Company.

The Impeachment of Warren Hastings

  • The Pitt’s India Act of 1784 was a rude shock and bitter disappointment for Warren Hastings.

  • His image and reputation were tarnished in England. Therefore, he resigned and left India in June 1785

  • In 1787, Warren Hastings was impeached in the Parliament by Edmund Burke and the Whigs for his administrative access.

  • Burke brought forward 22 charges against him

  • He received the pension from the Company and lived till 1818.

Estimate of Warren Hastings

  • He was a gifted personality endowed with ‘strong will, great energy, and resourcefulness’.

  • Since he considered Indian culture as a basis for sound Indian administration, he patronised the learning of Indian languages and arts.

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