Mir Osman Ali Khan was the last Nizam of Hyderabad.

A British court on Wednesday dismissed Pakistan's decades-old claim on a sum of 1 million pounds, which was transferred in 1948 to Pakistan's High Commissioner by the ruler of Hyderabad for "safe-keeping". Ruling in India's favour, the court said the Nizam's descendants are the rightful owners of the fund. The money, which has appreciated to 35 million pounds, is deposited in an account in the United Kingdom's National Westminster Bank.

Nizam Mir Osman Ali Khan's descendants, Mukarram Jah - the titular eighth Nizam of Hyderabad - and his younger brother Muffakham Jah, had joined hands with the Indian government in the legal battle against Pakistan.

"Nizam VII (Mir Osman Ali Khan) was beneficially entitled to the fund and those claiming in right of Nizam VII - the Princes and India - are entitled to have the sum paid out to their order," Justice Marcus Smith of the Royal Courts of Justice in London ruled.

"Pakistan's contentions of non-justiciability by reason of the foreign act of state doctrine and non-enforceability on grounds of illegality both fail," the order further read.

After partition, the seventh Nizam of Hyderabad, Mir Osman Ali Khan had refused to join either India or Pakistan. Fearing an invasion, he had transferred over 1 million pounds to Pakistan High Commissioner Habib Ibrahim Rahimtoola's London account for safe-keeping.

The seventh grandson of the Nizam, Mukarram Jah, had claimed that the money belonged to his family. The claim was backed by the Indian government.

In 2013, Pakistan had claimed that the fund belongs to its government as the money was transferred to compensate for the weapons it provided to the Nizam before Hyderabad's annexation in 1948. It had also said that the fund was sent to keep it out of India's possession, news agency PTI reported.

The judge said there was no evidence that suggest the money in the NatWest bank was given in lieu of the arms, PTI reported.

The court dismissed Pakistan's argument that Hyderabad was illegally annexed, saying any such alleged illegality would in any case be irrelevant to the claim.

Commenting on the ruling, the Pakistan Foreign Office in Islamabad said it would take further action after examining the detailed judgment.