UK Court Verdict On Hyderabad Nizam’s Funds: How Pakistan’s Self-Goal Cost It 35 Million Pounds To India

On Wednesday, a United Kingdom (UK) High Court announced its verdict in a decades-old dispute between Hyderabad Nizam’s descendants in India and Pakistan over the funds transferred by the former at the time of the Partition.

The descendants of the seventh Nizam, Mir Osman Ali Khan's sons Mukarram Jah – the titular eighth Nizam of Hyderabad – and his younger brother Muffakham Jah entered into a confidential agreement with the Indian government last year. Therefore, the case had effectively become an India-Pakistan dispute in the UK High Court.

The court dismissed all the arguments of the Pakistan and awarded the 35 million pounds in question to the Indian side.

Background

The Nizam at the time didn’t want Hyderabad to merge with India, but the Islamic Republic of Pakistan. He feared a military annexation by India and got transferred £1,007,940 and some change in 1948 to Habib Ibrahim Rahimtoola, the then Pakistani High Commissioner to UK. The money was purportedly transferred for the purchase of arms and ammunition from Pakistan.

In 1954, the NIzam filed a case in a UK court to retrieve the money. Pakistan then invoked sovereign immunity and got the case halted on directions of the House of Lords.

There was no progress in the matter till 2013, when Pakistan itself filed a case against the National Westminister Bank where the money was held, to claim the funds. This ended the sovereign immunity cover, and the matter was up for a resolution by the court.

This turned out to be a self-goal for Pakistan. When Pakistan realised it and subsequently attempted to discontinue the proceedings, it was rejected as an abuse of the process by the UK court.

The judgement

The UK High Court rejected Pakistan's claim that the funds were a payment for the arms shipments or an outright gift. The court held that the beneficial ownership in the fund as at 1948 lay with the 7th Nizam, and that it had been held on trust to his benefit and that of his successors in title since then.

The court also rejected Pakistan’s argument that the heirs of the Nizam had lost their right to inheritance due to the statute of limitation.

"It was Pakistan’s choice to plead a limitation defence and, had she not done so, the Court would not have been concerned that a claim was being made out of time by the Princes and India,” the judgement read.

The court concurred with the Indian side that the statute of limitation doesn’t apply in the case as the legal proceedings had been halted in 1954 due to Pakistan’s right of sovereignty defence.

Pakistan also raised issues with the integration of the Hyderabad princely state in India through Operation Polo. It contended that the action was in violation of the Indian Independence Act 1947 as well as the Charter of the United Nations. and therefore, India’s claim to the Nizam’s inheritance was “illegal”.

The court rubbished this argument of Pakistani side, saying that India’s interest in the fund arose only from 1965 when the former Nizam “assigned to the President of India his claim to the Fund”. It further stated that “the Settlement between the Princes and India” has rendered the issue irrelevant.

The court further found Pakistan’s comments on Operation Polo “inconsistent with the United Kingdom’s position regarding the status within India of the former State of Hyderabad” and antagonistic to UK-India bilateral relations.

Nawab Najaf Ali, grandson of Nizam-VII, expressed happiness at the ruling and said he had tried for an out-of-court settlement with Pakistan in 2008 with regard to the disputed amount but the neighbouring country did not respond.