Revision as of 13:17, 31 March 2015

2015: London HC ruling

The case inside

The Times of India

Mar 19 2015

Sachin Parashar

Court opens door for India to regain Hyd funds from Pak

The 67-year-old Indo-Pak Hyderabad Funds saga has taken another turn with London's High Court of Justice ruling that Pakistan no longer has sovereign immunity over the State of Hyderabad's wealth. All these years, India was forced to deal with Pakistan bilaterally on recovery of the funds because in 1957 Islamabad invoked its right to sovereign immunity from court proceedings in Britain.

Hyderabad Funds refers to the over £1 million (£1,007,940 and 9 shillings) transferred from the erstwhile State of Hyderabad's bank account in London's National Westminster Bank to the account of the then Pakistan High Commissioner to UK, Habib Ibrahim Rahimtoola, on September 20, 1948.This was two days after the Nizam decided to accede to India. The money is now valued at around £35 million (rough ly Rs 322 crore) and has three claimants -Pakistan, India and the Nizam's family . As the successor state to Nizam's Hyderabad, India claims the Hyderabad Funds. Faced with no prospect of recovering it through the courts, the Indian Cabinet has been authorizing the government since the 1960s to pursue efforts for an out-of-court settlement with Pakistan and the Nizam's heirs.

In 2013, Islamabad decided to claim the funds and reopened legal proceedings. The court ruled that if Pakistan subjected itself to the UK court's jurisdiction it stood to lose its state immunity .

With this, India's chances of a recovery through the legal route brightened. India insists the funds belonged to the Nizam's state, not part of his private assets. The transfer to Rahimtoola was on instructions of the Nizam's finance minister, probably an authorized signatory to the account. He did it without the Nizam's consent. “These instructions were irregular.The finance minister had no power to withdraw the money without the Nizam's express sanction or that of his government. The ruler's instructions to retransfer the funds weren't complied with,“ the government had said earlier. The recent British court ruling means the dispute over the ownership of funds can be decided through the legal route, Islamabad having lost the right to block proceedings.

In January, 2015, the UK court set aside Pakistan's plea to discontinue proceedings, and joined all interested parties, including India and the Nizam's grandsons. The court seems to have held Pakistan's actions unreasonable and ordered it to pay the legal costs incurred by the bank, India and the two grandsons who had opposed the Pakistani plea to discontinue proceedings. Interpreting the decision, a leading UK legal firm BrownRudnick emphasized that sovereign states must take great care not to take steps that can constitute a waiver of their sovereign immunity from jurisdiction.

1954-2013: a history of the case

Graphic curtesy: The Times of India

What Pakistan owes India

The Times of India

Mar 23 2015

Hyd funds: Pak to pay India £150k legal cost

With Pakistan no longer enjoying state immunity over Hyderabad Funds, India has initiated discussions with the Nizam's heirs to bring back the 35 million pound sterling lying in a UK bank for the past 67 years. The Indian government has been emboldened by the fact that the English high court has not just ruled that Islamabad no longer had immunity over the funds but also, as reports from London said on Sunday , asked Pakistan to pay India a compensation of 150,000 pounds for the legal costs incurred by the latter. Official sources said “initial discussions“ had taken place over the issue with the Nizam's family , the third claimant to the erstwhile Hyderabad ruler's money which was transferred to the bank account of then Pakistani high commissioner to the UK in 1948.

The Union Cabinet in 2008 had passed a resolution authorizing the government to pursue an out of court settlement with Pakistan and the Nizam's family for the money seen by India as its “sacred inheritance. The fact that Pakistan had sovereign immunity over the money , bestowed on it by the House of Lords in 1957, made it impossible for India to achieve this. The government believes that a window has now opened to take control of the money as the English High Court has ruled that Pakistan did not have immunity anymore as it had itself taken legal recourse to settle the issue of ownership once and for all.

Faced with Pakistan's at tempt to recover the Hyderabad Funds through a suo motu legal effort in 2013, India had no choice but to join the proceedings. Realizing later that it could lose its sovereign immunity because of the legal claim it had made to recover the full amount, Pakistan sought to discontinue from the proceedings but this plea was set aside by the court. The court, in fact, asked Pakistan to pay the legal costs incurred by the National Westminster Bank, which holds the money , India and the two grandsons of the Nizam who had opposed the Pakistani plea to abruptly discontinue the proceedings.