The question of the renewal of the Charter for the company was placed before the Parliament in 1829, before expiry of the term of 20 years granted to it by the Charter Act of 1813.
Select Committees of both the houses of British Parliament were appointed in February 1830, to investigate the affairs of the Company and the trade between Great Britain and China.
The Select Committee opined that India was being governed well by the Company. Consequently the Charter Act of 1833 was passed and it gave another lease of life to the Company for next 20 years.
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The Company lost its trading privileges-the monopoly of the China trade. Henceforth it became a purely administrative body under the Crown.
It was not necessary for the Europeans to seek or to obtain license for coming to India or settling here.
The debts of the Company were taken over by the Indian government which agreed to pay its shareholders a 10.5% dividend on their capital out of the Indian revenues for the next 40 years.
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This added to the burden of India and proved to be an important component of drain of wealth.
Governor-General of Bengal became the Governor-General of India. His powers and controls were further enhanced.
The Governor-General in council was given the power to control, superintend and direct the civil and military affairs of the Company. Central government was to have complete control over raising of revenues and expenditure.
The Act also gave Governor-General in council, the power to legislate for the whole of British territories in India, which were enforceable by courts in India.
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The Act also added one more member, the law member, to the Executive Council of Governor-General with fully legislative work only.
He had no vote in Council. Thomas Babington Macaulay, was the first holder of the post. The number of the members of the Presidency Councils was reduced to two from the earlier three.
The Act also provided for the codification of laws in India, through which Governor-General could appoint the Law Commission to study collect and codify various rules and regulations prevalent in India. This laid the foundation of codification of modern legal system in India.
Section 87, of the Act declared that no person can be disqualified for any place in the Company’s service by reason of caste, colour, creed or place of birth.
The Charter Act of 1833 afforded to the Indians an opportunity of entering into the Company’s service.
It was laid down that merit was to be the basis for employment in Government Services and the religion, birth place, and race of the candidates were not to be considered in employment.
Although the Act accepted in principle, the possibility of associating the Indians in the administrative set-up but, there was no provision for entry of the Indians in the covenanted civil service. In practice, very little was done to implement this pious provision.
The Charter Act of 1833, relieved the Company of all its trade activities changed the basic characteristics of the Company and the process reached its culmination in 1858 when the Crown replaced the Company.
Therefore, it is rightly said that the Charter Act of 1833 was a turning point in the history of Modern India.