Latest revision as of 19:00, 2 June 2021

[edit] The case, in brief

[edit] 1954-2013: a history of the case

Royal property: The Hyderabad Fund Case;
Graphic courtesy: The Times of India

See graphic:

Royal property: The Hyderabad Fund Case

[edit] 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.

[edit] 2019/ £35m in UK bank belongs to heirs, India: UK HC

Naomi Canton, Oct 3, 2019: The Times of India

The Hyderabad Funds
From: Naomi Canton, Oct 3, 2019: The Times of India

The UK high court ruled in favour of India and the titular eighth Nizam of Hyderabad and his younger brother in a case they had been fighting against Pakistan relating to who has the rights to £35 million (Rs 306 crore) stashed away in a British bank account since Partition.

India, the Nizam and his brother, who are the grandsons of the seventh Nizam, have a confidential settlement on how to split the money.

The dispute centred on a corpus of £1 million and one guinea that on September 20, 1948 was transferred by the seventh Nizam’s finance minister, Nawab Moin Nawaz Jung, from a government bank account to another in London held by Pakistan’s then high commissioner to the UK, Habib Ibrahim Rahimtoola. This was during the Indian annexation of the princely state of Hyderabad.

The grandson of the seventh Nizam, Mukarram Jah, and his younger brother Muffakham Jah have laid claim to the fund, saying it had been gifted to them in a trust set up by their grandfather on April 24, 1963. Pakistan, on the other hand, says it was a payment made by the erstwhile princely state to Pakistan for arming Hyderabad when it was about to be invaded by India. Justice Marcus Smith ruled on Wednesday the seventh Nizam was beneficially entitled to the £35 million fund, as were the princes and India.

Second victory for India & Salve

On July 8, 1954, the seventh Nizam together with the state of Hyderabad issued a writ before the UK high court against Pakistan and Rahimtoola, asking for the £1 million to be returned to them.

On July 19, 1955, Rahimtoola got the writ set aside on the premise that the English courts were interfering with Pakistan’s sovereign immunity. The money has stayed frozen in a British bank account ever since and grown to £35 million in the span of seven decades.

It was the second highprofile victory for Harish Salve while representing India in a case since he won a reprieve for Kulbhushan Jadhav at the International Court of Justice. Khawar Qureshi QC was Pakistan’s barrister in both cases. “In 2013, Pakistan felt that with the distance of time, it would bring action against the bank and the bank would pay and it would walk away. But the bank said there were two other claimants — the princes and India. Pakistan issued a notice of discontinuance, but we argued it was against the interests of justice to withdraw and the case came back. Whether they will appeal, I don’t know,” Salve said after the verdict.

He praised Justice Marcus Smith for drawing up a 140-page judgment on such a complex case in just three months. The two-week trial had ended in June.

“We had a good case. We won both times,” Salve said, referring to the ICJ verdict on Jadhav.

“The fund was held by Pakistan through her high commissioner in the UK on trust for Nizam VII and his successors in title. The fund was not held by Rahimtoola personally, nor did either Pakistan or Rahimtoola have any beneficial interest in the fund,” Justice Smith ruled.

Salve said: “Historians will be interested in Pakistan publicly acknowledging it was supplying arms. Whether to Nizam’s army or the Razakars militia, I don’t know.”

[edit] Over 120 heirs to share fund worth Rs 306 crore

Syed Akbar, Oct 3, 2019: The Times of India

Money was transferred to Pakistan envoy account
From: Syed Akbar, Oct 3, 2019: The Times of India

Timeline for Hyderabad Fund Case, 1948- 2019
From: Syed Akbar, Oct 3, 2019: The Times of India

Key Highlights

The Nizam estate had a secret understanding with Indian govt and as per the deal, the amount will be shared between the claimants.

Whether the Indian govt will claim its share is not known as the deal has been kept under wraps.

HYDERABAD: With the Business and Property Courts of England and Wales ruling that India and legal heirs of Mir Osman Ali Khan, the last Nizam of princely state of Hyderabad, are entitled to the £35 million (Rs 306 crore) held up in the NatWest Bank since September 1948 , the focus now shifts to the distribution of money among the claimants.

According to sources in the Nizam’s family, the money will be shared by Indian government, and the Nizam estate represented by Mukarram Jah and Muffakham Jah, grandsons of the Nizam, and 120 others who were part of the “estate”.

Nizam’s another grandson, Najaf Ali Khan, who heads the Nizam’s Family Welfare Association, had impleaded in the case along with about 120 legal heirs of the former ruler. They all now form part of the Nizam estate, which was supported by India, against Pakistan’s claim over the money, popularly known as Hyderabad Fund.

The Nizam estate had a secret understanding with Indian government and as per the deal, the amount will be shared between the claimants. Whether the Indian government will claim its share is not known as the deal has been kept under wraps.

According to city historians, more than money, it was a prestige issue for India and Pakistan. However, for the cash-poor claimants of the Nizam family, Wednesday’s judgment has come as a bonanza. Except for a couple of members of the erstwhile royal family, most claimants struggle to make both ends meet, family sources told TOI.

The secret deal notwithstanding, distribution of Hyderabad Fund is also subject to court’s approval. Justice Marcus Smith, who delivered the judgment, had noted “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”. This in other words means that the claimants should sit with the Indian government and strike at an understanding to be presented before the judge for final approval before disbursal of the money.

Family sources said only those members of the Nizam’s family who had impleaded in the case will get the money. The share will be known only after the family submits the claim details to the court. And if Pakistan prefers an appeal, the legal battle will continue, and the money will remain with the NatWest Bank.

[edit] 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.