Although individual Company servants made personal fortunes, the Company was floundering in bankruptcy and its stock had plummeted more than 60 percent in 1769. Parliament bailed out the Company, but it also imposed regulations in an attempt to bring order. In theory, the East India Company would be held responsible not just to its stockholders, but to the British Government. Its servants would be accountable to the laws of England, including those that prohibited bribery and corruption. The Regulating Act of 1773, 13 Geo. 3 c 63, was forged in response to bankruptcy and chaos in the East India Company in India. In reality, the Act was a collection of exceptionally vague clauses that failed to address fundamental constitutional questions at the heart of the legal crisis in Bengal. There was no consensus about law in India and relationships between Indian administrators, the Company and Parliament.
The Act separated the powers of executive and judiciary in British India. It established the position of Governor General, who, with a four-member Supreme Council, would have authority over all the Company’s territory in India. It also established the Supreme Court of Judicature, independent of the Company and answerable only to Parliament and the King, which would have jurisdiction over the territory in Bengal. The Act was designed to limit corruption. It forbade servants from taking “presents” or engaging in private trade. It paid unusually high salaries – £25,000 for the Governor General, £10,000 for Supreme Council members, £8,000 for the Chief Justice, and £6,000 for the judges – to discourage “private profiteering.” The high salaries and prestige provided motivation for the new Supreme Council members and Supreme Court Judges to leave London and brave the dangerous seas and climate of India.
New Council members were sent to assist Hastings. However, these members, led by Sir Philip Francis, formed an opposition to Hastings. Consequently, the Supreme Council was always split. Their disagreements led many of Hastings’ administrative bodies to cease functioning. The only matter on which they agreed was their battle with the Supreme Court.
On the Supreme Court, Sir Elijah Impey, an Advocate for the East India Company, was named Chief Justice. Sir Robert Chambers, Vinerian Professor of English Law at Oxford University, was named second ranking judge, destined to succeed him as Chief Justice. Justices John Hyde and Stephen Caesar Lemaistre came to the bench as Junior Justices with legal experience. Hyde and Lemaistre shared similar beliefs on the extent of the Court’s jurisdiction and worked together until Lemaistre’s death in 1777. Both were consistently present during the Court’s proceedings. Chambers was absent more often than not. Impey and Chambers both had further political ambitions to be on the Supreme Council.
This new Supreme Council and Supreme Court brought to Bengal to introduce regularity and curb injustice faced great difficulty making new structures in a highly politicized and profitable environment. The Regulating Act intended to correct problems, but initially its vague and conflicting language exacerbated confusion, allowing corrupt political, financial and judicial acts to continue.
The Regulating Act sowed the seeds for conflict between the Supreme Council and the Supreme Court. It defined, in vague and conflicting language, the jurisdictions of the Court and the Council. The Act charged the Governor General and Supreme Council with overseeing “all the territorial acquisitions and revenues in the kingdoms of Bengal, Bihar, and Orissa.” They believed that they alone should have jurisdiction over anyone involved with tax collection, especially zamindars. Any issues that arose between the Company’s councils and those in their tax collection system – made up of zamindars, banyans, agents, bankers, revenue farmers, collectors, supervisors, etc – should be handled by the Company’s Adalats and committees.
While the Supreme Council was given control of the tax collection system, the Supreme Court was charged by the Regulating Act to “prevent various Abuses which have prevailed in the Government and Administration . . . to the manifest Injury of the Publick Credit, and of the commercial interests of the said company.” The Court was expected to administer uniform justice to all British subjects in India, and in particular curb the provincial councils’ predatory practices. It had authority to judge civil, criminal, and ecclesiastical matters in Calcutta and was considered the final court of appeal for Bengal. Unfortunately, both the Council and the Court were given authority over an overlapping set of issues and people.