India and Pakistan have now brought their age old, historic rivalry to the Uk court over £35mn, stashed in a UK bank from 1947. The case which may be resolved in the UK high courts after decades of rivalry and diplomatic grandstanding involving a £1mn transaction made by Nizam Osman Ali Khan, the last monarch of the Princely state of Hyderabad to the Pakistan High Commissioner in London 1947 for safe keeping. The Nizam who died in 1967, was not short of cash and when Princess Elizabeth married Prince Philip, he gifted her a wedding gift of a diamond tiara and a Cartier diamond necklace in a design based on English roses.
When the British empire collapsed, the Nizam realised that India was preparing to take back Hyderabad from Princely state and fearing for his financial interest, moved the money to a Natwest bank in London. A week after the money was deposited, the Nizam filed a suit in a London court saying the money was transferred to Pakistan’s account without his knowledge. India too raised an objection, saying the money belonged to the Indian government as Hyderabad had acceded to the union. The bank then froze the account.
The case then went to the House of Lords, the then the highest court in the UK, and Pakistan successfully argued that as a sovereign nation it could not be sued, which meant the money would remain locked away, and neither party would be able to access it in the foreseeable future.
Now two of Nizam's grandsons, eighth Nizam, who is 84 and his brother Prince Muffakham, 80 want the money back for themselves. Their claim is supported by India but Pakistan is determined that it does not need to return the funds, as the money was owed to Pakistan for helping to smuggle arms into Hyderabad for Nizam's alleged security, before the Indian invasion of 1948, and the money could be construed as a payment for services.
For the last two weeks Mr Justice Marcus Smith has been hearing arguments from the brothers’ lawyers as well as legal teams for India and Pakistan.
However in 2013, Pakistan launched a legal challenge to try and unlock the funds in order to claim full ownership of the money and instructed Cherie Blair, QC, wife of the former British Prime Minister Tony Blair, to try to retrieve the money. This, in the judge's view, waived Pakistan's right to not be sued, the current Indian legal team, led by Paul Hewitt, a partner at Withers LLP has reportedly said.
Lawyers for Pakistan reportedly argue that the “international, military and political context” of the original transfer was clear: 'it was a response to India’s alleged violation of assurances from the British and the United Nations that India would not be allowed to invade Hyderabad'.
Khawar Qureshi, QC, reportedly said, “Pakistan had assisted Hyderabad in her attempts at self-defence against Indian aggression by arranging the supply and transportation of arms to Hyderabad.”
Lawyers for the Nizam told Mr Justice Smith that, “The determination of this claim has been stalled for too long.”
A judgment is expected in at least six weeks.
