UK court upholds India’s claim to £1 million sent by 7th Nizam of Hyderabad to London in 1948

The High Court of England and Wales on Wednesday rejected Pakistan’s claim to £1 million (now valued around £35 million or Rs 306 crore) the seventh Nizam of Hyderabad, Mir Osman Ali Khan, sent to a London bank in 1948, the Hindustan Times reported. Instead, the High Court upheld the claims made by India and the Nizam’s two descendants in the matter.

India and the Nizam’s descendants – Mukarram Jah and Muffakham Jah – had contested Pakistan’s claim that the money was a payment to it for supplying arms to the Hyderabad state in 1948, when India annexed it.

The Nizam had transferred the money – worth £1 million back then – to the then Pakistan ambassador in London, Habib Ibrahim Rahimtoola, for safe-keeping. Rahimtoola had in turn, agreed “to keep the amount mentioned by you in my name in trust”. The amount lies in National Westminster Bank in London, with interest accruing over the years.

In the verdict, Justice Marcus Smith ruled that “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”, PTI reported. “Pakistan’s contentions of non-justiciability by reason of the foreign act of state doctrine and non-enforceability on grounds of illegality both fail,” he added.

“The Court has issued a wide-ranging judgment today after analysing documentation going back more than 70 years and embracing the law of constructive and resulting trusts, unjust enrichment, foreign act of state, illegality and limitation of actions,” the External Affairs Ministry said in a statement. “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.”

The ministry added that the court had ruled Pakistan’s pleading of limitation as an “abuse of process” and that “remedies in trust law and restitution were available against both Pakistan and the Bank”. The matter was subject to a hearing in the 1950s, the ministry said, adding that the House of Lords had set aside the proceedings brought by the 7th Nizam of Hyderabad claiming the fund while Pakistan had invoked state immunity.

Paul Hewitt, a partner in Withers LLP, expressed his happiness over the verdict. Withers LLP, an international law firm based in the United Kingdom, has represented the eighth Nizam since Pakistan initiated proceedings in the case in 2013.

“We are delighted that today’s judgment recognises His Exalted Highness the VIII Nizam’s rights to funds which have been in dispute since 1948,” Hewitt said. “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.”

Pakistan, however, said it will examine the judgement before taking further action. “The ruling does not take into account the historical context of the transfer when India illegally annexed Hyderabad in violation of International Law and all civilized norms, leading the Nizam of Hyderabad to make desperate efforts to defend his people and the state from Indian invasion,” a statement by the Pakistan Foreign Office said.

“The Nizam also raised the matter with the UN Security Council where the issue remains on the agenda to date,” the foreign office added. “The Nizam as a sovereign approached Pakistan for assistance which the Government of Pakistan provided.”

British India was partitioned into two dominions – India and Pakistan – at the time of independence from British rule in 1947. Mir Osman Ali Khan did not want the Hyderabad state to accede to India. However, after an armed rebellion by a group known as the Razakars, the Indian Army entered Hyderabad in 1948 and annexed it to India.

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