Act of settlement:

The British Parliament passed the Act of Settlement 1781 on July 5, 1781, to correct the flaws in the
Regulating Act of 1773. This Act's main purpose was to define the relationship between the Supreme Court
and the Governor-General in Council. The "Amending Act of 1781" or "Declaratory Act of 1781" is the
prevalent name for this law.

Historical background:

During the years 1779-1780, the rivalry between the Supreme Court and the Supreme Council reached a
pinnacle. The Supreme Council then filed a petition against the Bengal Supreme Court's unlawful operation.
Various zamindars, company servants, and others filed similar petitions. As a result, the Parliament established
a Committee (Touchet) to investigate the situation and report as soon as feasible. The Committee then
delivered its report, and in 1781, Parliament passed the Act of Settlement.

Circumstances that led to the passing of Act of Settlement :

1.
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.
2. 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.
3. 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.
4. Also, there was interference in the personal laws of the communities which had agitated
the people.

Amending Act of 1781 - Objectives

The main goal of enforcing the Regulating Act of 1773 is outlined below.

5. To compensate the Governor-General and the Officers of the Council who acted on their directives to
obstruct the Supreme Court's proceedings.
6. To clear up the ambiguities and difficulties produced by the Regulating Act and the Charter, which
essentially divided the government and the courts.
7. To assist the governments of Bengal, Bihar, and Orissa in ensuring that income may be collected with
assurance at any time.
8. To safeguard Indigenous peoples' rights, usages, and privileges.

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.

Defects of Act of Settlement, 1781

1. The governor and general did not have veto power and the governor general was made answerable to
the director and was held responsible for all acts relating to administration in India, but the governor
general had no independent authority to adjudicate.

2. The Governor was in actual practice subordinate to the Governor General.

3. There was a lot of confusion about the power and jurisdiction of the Supreme Court.

4. The Act also failed to address the concerns of the people of Indian origin who were the real victims.

5. The issuance of writs was a matter of great confusion within the jurisdiction of the Supreme Court.
The charter issue provided certain writs to the Supreme Court in some cases but in other cases the charter
had provisions for confusion.