Delhi / India wins case against Pakistan over Hyderabad Nizam's £35 mn funds in UK

The high court of England and Wales on Wednesday ruled in favour of India and the two descendants of the late 7th Nizam of Hyderabad, who sent £1 million to a London bank in 1948, now estimated to value at least £35 million.

The historic case has gone through several twists and turns with India and the descendants — Mukarram Jah and Muffakham Jah — on one side and Pakistan on the other. Pakistan had claimed that the money on the ground was a payment for supplying arms to the Hyderabad state during India’s annexation in 1948.

The 7th Nizam had transferred the £1 million to the then Pakistan ambassador in London, Habib Ibrahim Rahimtoola, for safe-keeping, who agreed “to keep the amount mentioned by you in my name in trust”. The amount, accruing interest over the decades, lies in the National Westminster Bank in London.

The 166-page judgement by Justice Marcus Smith sets out the history of the dispute, from India’s ‘Operation Polo’ to annex Hyderabad, and later developments that include the Nizam in 1965 ‘assigning’ the President of India the claim to the money in London.

The judge said: “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”.

“(It) is appropriate to record that the Nizam’s successor in title can be no-one other than the Princes or India…I have seen no hint of the possibility of any further claimant to the Fund, beyond the Princes and India.

“In these circumstances, Nizam VII 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. I will leave it to the parties to frame an appropriate form of order for my approval”.

Paul Hewitt, partner in law firm Withers LLP, who acted for the VIII Nizam since Pakistan issued proceedings in 2013, said: “We are delighted that today’s judgment recognises…the VIII Nizam’s rights to funds which have been in dispute since 1948”.

“Mr Justice Smith’s judgment covers a complex historical and legal set of issues, interpreting facts and events that occurred 70 years ago to establish that the funds, which now amount to £35 million, were always held in trust for our client’s grandfather, the VII Nizam”.

“Our client was still a child when the dispute first arose and is now in his 80s. It is a great relief to see this dispute finally resolved in his lifetime.”

The judge rejected Pakistan’s claims of illegality on India’s part. Pakistan had alleged that India’s annexation of Hyderabad was unlawful and that it followed that India and the princes should be barred from any claim to the fund.

India argued that the question of whether India’s annexation of Hyderabad was lawful was irrelevant to the question of ownership of the fund. The judge concluded that India’s that India’s submission was well-founded, and that even if there were illegality of the nature alleged by Pakistan (the judge has not made any findings on that issue), any such illegality would in any case be irrelevant to the claim.