UK court rules in favour of India in the Hyderabad Fund case

Wednesday 09th October 2019 07:43 EDT

The High Court of England and Wales ruled in favour of India and the two descendants of the late 7th Nizam of Hyderabad in the famous Hyderabad Fund case against Pakistan. The 70 years old fund worth £35 million is currently held by the NatWest Bank since 1948. According to the judgment the fund will be shared between the Indian government and the heirs of Mir Osman Ali Khan, the last Nizam of the princely state of Hyderabad. However, the proportion or the terms of the settlement between the Indian government and the heirs is flagged under a confidential agreement.

“We are looking at all the options in terms of asking for compensation from Pakistan's end but we will only proceed with any kind of certainty after the court allocates further dates of hearing. From India's perspective we got something and the Nizam's heirs got something. We got the claim and we have won it,” said India's counsel Harish Salve.

Pakistan can seek to appeal the decision but otherwise, the fund would be transferred to the Indian government and the grandsons and distributed between themselves accordingly.

The Fund had been held in the account of the High Commissioner of Pakistan to the UK Habib Ibrahim Rahimtoola since September 1948. The 7th Nizam had transferred the £1 million, now estimated at least £35 million, to the then Pakistan ambassador in London Rahimtoola for safe-keeping, who agreed “to keep the amount mentioned by you in my name in trust.” Earlier, Pakistan had claimed that the money was a payment for arms supplied to the Hyderabad state during India’s annexation in 1948.

In 2013, Pakistan commenced fresh proceedings, thereby waiving state immunity. A subsequent attempt by Pakistan to discontinue the proceedings was rejected as an abuse of process by the UK court. The 140 page judgment ruled out 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. In the judgment, the UK High Court has rejected Pakistan's claim that the fund had been intended as payment for arms shipments or as an outright gift. The court has held that 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 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”.

"We welcome the judgment," Najaf Ali Khan, one of the Nizam's grandsons said. "The High Court has rightly rejected Pakistan's claim. The family has long awaited this judgment."

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