Treaty of Allahabad and Company Rule in Bengal

The Treaty of Allahabad, signed in August 1765, marked the formal entry of the British East India Company (EIC) into the political and administrative structure of India. Negotiated by Robert Clive following the decisive victory of the British forces over the combined armies of Mir Qasim (Nawab of Bengal), Shuja-ud-Daulah (Nawab of Awadh), and Shah Alam II (Mughal Emperor) in the Battle of Buxar (1764), the pact transformed a trading entity into a sovereign ruling power.

Terms of the Treaties

Robert Clive concluded two distinct treaties at Allahabad in August 1765—one with the Nawab of Awadh and the other with the Mughal Emperor.

Treaty with Shuja-ud-Daulah (Nawab of Awadh)

• Surrender of Territories: The Nawab ceded the districts of Allahabad and Kora to Mughal Emperor Shah Alam II.
• War Indemnity: Awadh paid Rs 50 lakh to the East India Company as war damages.
• Estate Rights: Balwant Singh, the Zamindar of Banaras, was confirmed in full possession of his estate.
• Buffer State Concept: Awadh was retained as a buffer state between the Company’s Bengal territories and potential threats from the Marathas.

Treaty with Shah Alam II (Mughal Emperor)

• Grant of Diwani Rights: The Emperor issued a royal Farman granting the East India Company the Diwani (the right to collect land revenue and administer civil justice) for Bengal, Bihar, and Orissa.
• Annual Tribute: The Company agreed to pay an annual tribute of Rs 26 lakh to Shah Alam II.
• Emperor’s Residence: Shah Alam II was placed under the protection of the Company and housed at Allahabad.
• Nizamat Expenses: An allocation of Rs 53 lakh was set aside from the Bengal revenues for the maintenance of Nizamat (criminal justice, police, and border defense) under the local Nawab.

Dual System of Government in Bengal (1765–1772)

The Treaty of Allahabad created a split administrative system in Bengal called the Dual Government (Doyoidh Sashan), devised by Robert Clive. Power was completely separated from responsibility.

• Diwani (Revenue Administration): Managed directly by the Company. The EIC controlled financial resources without any responsibility for civil governance or welfare.
• Nizamat (Executive & Judicial Administration): Left to the puppet Nawab of Bengal, Najm-ud-Daulah. The Nawab was responsible for public administration and law enforcement but lacked military power or financial resources.

Execution through Naib Diwans

To avoid direct involvement in local administration and prevent European diplomatic conflict, the Company appointed Indian officials called Naib Diwans to collect revenue on its behalf:

• Mohammad Reza Khan: Appointed for Bengal.
• Raja Shitab Rai: Appointed for Bihar.
• Rai Durlabh: Appointed for Orissa.

Key Provisions and Political Framework

Economic and Administrative Consequences

Commercial Monopolization and Wealth Drain

The grant of Diwani rights altered British commerce in India. Previously, the EIC imported silver bullion from Britain to buy Indian goods. Post-1765, the Company used revenues collected from Bengal to purchase Indian textiles, spices, and raw goods for export to Europe. This practice initiated the systematic Drain of Wealth from India.

Exploitation and Agricultural Crisis

Company officials and local revenue collectors (Amils) engaged in predatory tax collection tactics. High revenue demands coupled with corrupt practices of private trade led to widespread rural distress.

The Great Bengal Famine of 1770

The administrative breakdown under the Dual System culminated in the catastrophic Bengal Famine of 1770. Approximately one-third of the population of Bengal perished. Despite the crop failure and demographic collapse, the Company maintained strict revenue collection targets.

Abolition of Dual Government and Regulating Act

The economic instability in Bengal and financial distress of the Company led the British Parliament to intervene:

• Abolition by Warren Hastings (1772): Warren Hastings ended the Dual System in 1772, bringing Bengal under direct Company administration.
• Removal of Naib Diwans: Mohammad Reza Khan and Raja Shitab Rai were removed from their positions, and the Company established Board of Revenue offices in Calcutta.
• Regulating Act of 1773: Passed by Parliament to oversee EIC affairs, this act elevated the Governor of Bengal to Governor-General of Bengal, establishing a central authority.

Key Facts for Quick Reference

• Signatories of Allahabad Treaty (16 August 1765): Lord Clive, Shah Alam II, and Shuja-ud-Daulah.
• Diplomatic Scribe: Mirza Sheikh I’tisam-ud-Din, a Bengali Muslim diplomat, drafted the text of the Treaty of Allahabad in Persian.
• Nawab of Bengal during Treaty: Najm-ud-Daulah (son of Mir Jafar), who signed a separate treaty in February 1765 surrendering military powers to the Company.
• Tribute Paid to Emperor: Rs 26 lakh annually by the EIC.
• Sum Retained for Nizamat: Rs 53 lakh annually allocated to the Nawab.
• First Collector Posts: Created during the reform period following the collapse of the Dual Government to streamline revenue collection directly under British supervisors.