Court of Directors of the East India Company

“ It was under the direction of their own proprietary, uncontrouled by parliament, that the Company rose to an unexampled height of wealth and prosperity: since the interference of parliament, their affairs have declined. Possibly now the patronage is so valuable and extensive, their constitution may be defective, by the too immediate dependence of the directors on the proprietors, who, by their brigues and cabals, overawe, and often make abortive the best intentions of the directors. ”

“ The credit of a public company is much superior to that of private merchants; those to whom they owe the prices of goods, freights or other book debts, are much more ready to indulge them with delays of payment than the creditors [Pg 21] of particular merchants. The India Company is under no embarrasment with respect to its creditors; its only embarrasment is from the choice it has unhappily made of a set of Directors, who seem determined, if possible, to stab the credit of the Company, and to try to what degree of injuries and insults the patience of the Proprietors will tamely submit. ”

“ The abstract justice in executing Nundcomar for the crime of forgery may be open to question, but Sir Elijah Impey, as Chief Justice of the Supreme Court, was bound to follow English law, without making any exception in favour of a Brahman.
Collision between the Supreme Court and the Sudder. §10. Meanwhile there was a collision between the Supreme Court and the Sudder. The Supreme Court [69] began to exercise jurisdiction over zemindars and other Asiatics throughout the Bengal provinces, and to override the decisions of the Company's Courts. ”

“ It is the duty of every British subject to submit with reverence and veneration, to whatever obtains the sanction of the three branches of the Legislature; but when any particular bill appears, to common apprehension, to be of dangerous consequence, we are entitled to hope and presume that it never will pass into a law. [Pg 22]
State of the East India Company's affairs with respect to the cash which will come into their treasury, and what must be issued from thence at different periods. ”

“ The affairs of the Company were brought before Parliament, and a Committee exposed a series of intrigues and crime. It was to remedy this rotten condition of things that in June of 1773 two Bills were introduced, of which one authorised the loan just mentioned, and the other, celebrated as the India Act, effected most important changes in the Company’s constitution and its relations to India. A Governor-161General was appointed to reside in Bengal, to which the other presidencies were to be made subordinate. A supreme court of judicature was inaugurated at Calcutta. ”

“ The East India business is in a way of being settled,—400,000l. to be paid by the company for three years, and no addition of term to be given for their charter. It remains for the General Court of Proprietors to consent to this next Wednesday, which, if they do, the Parliament will confirm it on Friday. We had some good warm talk upon it yesterday in the House. Conway and Beckford and I sparred a good deal, and I am vain enough to think I did not come off with the worst of it. ”

“ He always contended, that the first step towards an improved management of our concerns in India must be a reform at home, in the constitution of the Court of Directors and Court of Proprietors. He proposed some changes, not because they were sufficient, but because they were practicable, and suggested that the Directors, instead of being changed annually, should remain in office for several years ”

“ If it had been therefore the intention of the Legislature to restrain the Company from purchasing goods on credit, or from incurring freights or other such debts, and that their whole debts of every kind should not exceed six millions, it is very plain to those who are versant in mercantile transactions, and who know the state of this company's trade, that they could not have carried on their affairs in such a manner as they have done, nor have rendered the trade of India so great an object as it is, to this commercial kingdom. ”

“ These juries would prove the Magna Charta, the palladium, and true security of Indian liberty and property, against the despotism and extortion of their foreign government. And it evidently appears that the virtue of these juries, (as being, at one and the same time, truly effectual to the subject, and perfectly safe to the 150sovereign,) entirely depends upon the circumstance, of completely excluding the Company and her servants, from the smallest participation in the executive powers of government. ”

“ For, here, juries may exist with great propriety and efficacy, seeing that the Company will, on account of her commerce, keep a number of servants at this supreme settlement; there will likewise be, no doubt, many free merchants (as they are termed) : and, consequently, there will never be wanting a choice of persons unconnected with, and uninfluenced by the political government; and therefore fit to form a grand inquest; as well as petit or special juries, to decide in either criminal cases, or disputes of property. ”

“ Yet the actual profit of the East India Company at this time was nothing prodigious; it barely touched 8 per cent. on the capital employed. Still, the monopoly must have been valuable, for the efforts made to retain it would fill volumes; and one Act of Parliament followed another, prohibiting foreign adventure to India under penalty of forfeiture of triple the sum embarked, and declaring all British subjects found in India who were not in the Company's service liable to seizure and punishment, and generally crying "hands off" to all and sundry. ”

“ But it is NOT SO with regard to the chief seats of Indian commerce; they will find, that they cannot arbitrarily exclude British subjects from those seats, beyond a limited time; that they cannot debar the nation the beneficial use of them; and that they will not be suffered to render them unavailable, or unprofitable. As soon as the India Trade shall be thrown open, the ports of India will necessarily become open; and, if the Company should then search for their private right to close them, they will find, that it is merged in the public right to use them ”

“ But Parliament can do what the courts neither can do nor ought to attempt. Parliament is competent to give due weight to all political considerations. It may modify, it may mitigate, and it may render perfectly secure, all that it does not think fit to take away. It is not likely that Parliament will ever draw to itself the cognizance of questions concerning ordinary corporations, farther than to protect them, in case attempts are made to induce a forfeiture of their franchises.
The case of the East India Company is different even from that of the greatest of these corporations. ”

“ That if any manufacturer or merchant can find out an article that will sell in India, the company so far from preventing his doing so, afford him facilities not otherwise attainable. No mistake can in fact be greater than to say, with the uninformed and misled public, that the East India Company is a monopoly, and injures trade by preventing our merchants and manufacturers from having a scope for their capital and industry. ”

“ In the history of the intercourse of the East India Company with the Chinese, it will be found that the authorities were never satisfied with the averment that the individual charged with offences could not be found; they always insisted that some English subject could be found and delivered over to the penalties of the law. They invariably took high ground ”

“ So long as the Company carries on its trade with advantage to itself and the nation, and preserves entire, an ample sufficiency of funds to pay all its debts, and repay its capital, there can be no reason in common sense for preventing its employing its credit in the purchase of as great a quantity as possible of our own commodities to send to India, and employing as great a number of shipping as the trade will possibly allow. ”

“ And a court of equity may not be called upon at the appeal of any single stockholder to compel the directors or the corporation to enforce every right which it may possess, irrespective of other considerations. It is not a trifling thing for a stockholder to attempt to coerce the directors of a corporation to an act which their judgment does not approve, or to substitute his judgment for theirs. ”

“ The East India Company had its troubles, to be sure, which were many and great, yet it increased in power, wealth, and strength, until at the close of the eighteenth century it had become possessed of a large portion of the continent of India, maintaining its own armies, forts, palaces, Courts of Directors, Boards of Council, Governors, and Typeans. ”

“ For it is notorious that, ever until the late distraction in the Company’s affairs, the arbitrary application of these emoluments, posts, &c. was vested in the Directors; and indeed the entire powers and interests of the Company; insomuch that the Directors might, with propriety, be termed the Company. So that the whole security of national liberty, and, of course, the sole obstruction to the minister’s dangerous views, depended on the integrity and independent spirit of 24 Directors; of whom, again, one or two generally leads all the rest. ”

“ To the extent the Court allows shareholder plaintiffs to succeed on a theory that a director is liable for a failure to monitor business risk, the Court risks undermining the well settled policy of Delaware law by inviting Courts to perform a hindsight evaluation of the reasonableness or prudence of directors' business decisions. Risk has been defined as the chance that a return on an investment will be different that expected. The essence of the business judgment of managers and directors is deciding how the company will evaluate the trade-off between risk and return. ”

“ Whether or not a corporation shall seek to enforce in the courts a cause of action for damages is, like other business questions, ordinarily a matter of internal management, and is left to the discretion of the directors, in the absence of instruction by vote of the stockholders. Courts interfere seldom to control such discretion intra vires the corporation, except where the directors are guilty of misconduct equivalent to a breach of trust, or where they stand in a dual relation which prevents an unprejudiced exercise of judgment ”

“ A corporation having such a controversy, which it is foreseen must end in litigation, and preferring for any reason whatever that this litigation shall take place in a Federal court, in which it can neither sue its real antagonist nor be used by it, has recourse to a holder of one of its shares, who is a citizen of another state. This stockholder is called into consultation, and is told that his corporation has rights which the directors refuse to enforce or to protect. ”

“ The power to charter companies is not specified in the grant, and I contend is of a nature not transferable by mere implication. It is one of the most exalted attributes of sovereignty. In the exercise of this gigantic power we have seen an East India Company created, which has carried dismay, desolation, and death throughout one of the largest portions of the habitable world. ”