Doctrine of Lapse
A controversial aspect of East India Company rule was the doctrine of lapse, a policy under which lands whose feudal ruler died (or otherwise became unfit to rule) without a male biological heir (as opposed to an adopted son) would become directly controlled by the Company and an adopted son would not become the ruler of the princely state. This policy went counter to Indian tradition where, unlike Europe, it was far more the accepted norm for a ruler to appoint his own heir.
The doctrine of lapse was pursued most vigorously by the Governor-General Sir James Ramsay, 10th Earl (later 1st Marquess) of Dalhousie. Dalhousie annexed seven states, including Awadh (Oudh), whose Nawabs he had accused of misrule, and the Maratha states of Nagpur, Jhansi and Satara, and Sambalpur. Resentment over the annexation of these states turned to indignation when the heirlooms of the Maharajas of Nagpur were auctioned off in Calcutta. Dalhousie's actions contributed to the rising discontent amongst the upper castes which played a large part in the outbreak of the Indian mutiny of 1857. The last Mughal Badshah (emperor), whom many of the mutineers saw as a figurehead to rally around, was deposed following its suppression.
In response to the unpopularity of the doctrine, it was discontinued with the end of Company rule and the British Parliament's assumption of direct power over India.
Read more about this topic: Princely State
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