Step 1: Understanding the Concept:
The Subsidiary Alliance was a system introduced by Lord Wellesley (1798–1805) to expand British influence in India without direct war in every instance.
Step 2: Detailed Explanation:
The terms of the Subsidiary Alliance were quite specific and restrictive for Indian rulers.
Firstly, the ruler had to accept the permanent stationing of a British force within his territory.
Secondly, the ruler had to provide resources for the maintenance of this force, often by ceding territory or paying a cash subsidy.
Thirdly, a crucial condition was that the ruler had to disband his own military forces; he was no longer allowed to maintain an independent army.
Fourthly, the British promised to protect the state from external aggression and internal revolt.
Statement (C) is incorrect because the alliance explicitly forbade rulers from keeping their own private or state armies.
Step 3: Final Answer:
Therefore, the statement claiming that rulers were allowed to keep their own army is the incorrect one.