UK court refutes Pak's claim over Hyd Nizam's £35 million fund, rules in India's favour

The landmark case has been going on for 70 years, since India and Pakistan began staking claims to the funds.

news Law

The High Court of England and Wales in a landmark judgement ruled in favour of India and the two descendants of the 7th Nizam of Hyderabad, on Wednesday in a case dating back to 1948.

It all began in 1948, two days after Mir Osman Ali Khan, the last Nizam of Hyderabad state, transferred £1,007,940 and 9 shillings from the State of Hyderabad’s bank account in the National Westminster Bank in London to another account in the same bank.

This second account in the London bank was held by Habib Ibrahim Rahimtoola, who was then Pakistan’s High Commissioner to the UK.

While the Nizam's finance minster was a signatory to the account, the minister did not have authority to withdraw or transfer the funds without the Nizam's express sanction. Later, the Nizam's instructions to retransfer the funds were also not followed.

India and the descendants of the Nizam (Mukarram Jah and Muffakham Jah) were on one side of the argument and Pakistan on the other. The descendants say that they are the beneficial owners of the fund which was given to them as a gift by their grandfather in a trust set up in April 1963. However, Pakistan claimed that the money was taken as payment for supplying weapons to Hyderabad during its annexation in September 1948.

The weapons, Pakistan claimed, were for the Nizam to protect the then princely state of Hyderabad against India's invasion to annexe it.

Just in: UK Court rules in favour of India who owns 35 million pounds of Nizam of Hyderabad; Rejects Pakistan's claim. pic.twitter.com/8Ok7D649F1 — Sidhant Sibal (@sidhant) October 2, 2019

“Although the Government of Hyderabad was involved in the purchase of weapons in order to resist what Nizam VII saw as attempts by India forcibly to annex Hyderabad, and although the Second Account was used to pay for some of these weapons, I do not consider that the transfer had anything to do with the purchase of weapons or the compensation of Pakistan (in any way) for the purchase of weapons,” Justice Marcus Smith stated.

The judge added that 'the trust was either a constructive trust in favour of Nizam VII or a resulting trust in favour of Nizam VII'. He further said that Nizam VII and India were beneficially entitled to the fund. Moving Pakistan completely out of the equation, the judge said, "The Princes and India – are entitled to have the sum paid out to their order. I will leave it to the parties (Nizam's family and Indian government) to frame an appropriate form of order for my approval."

The money which had been transferred by the 7th Nizam to the Pakistan High Commissioner has remained in the account at the National Westminster Bank now amounts to an estimated value of at least £35 million.

A press release by the Ministry of External Affairs said, "The Court rejected arguments advanced by Pakistan that the dispute was non-justiciable, either in whole or in part; that the doctrine of illegality somehow barred recovery; or that the claims of other parties were time barred." This was in reference to Pakistan's argument that because India's annexation of Hyderabad was illegal, India should have no right to the funds. The court rejected this argument.

"Having found that the 7th Nizam was beneficially entitled to the Fund, the Court concluded that those claiming in right of the 7th Nizam i.e.India and the two grandsons of Nizam were now entitled to have the Fund," the MEA press release said.