India, Pak clash over Nizam of Hyderabad funds in UK
The 70-year dispute centres on £1 million that on around September 16, 1948 was transferred by the 7th Nizam of Hyderabad — who ruled the princely state between 1911 and 1948 — to a bank account in London held by Pakistan’s then high commissioner to the UK, Habib Ibrahim Rahimtoola. The £1 million has since grown to £35 million and remains in a NatWest bank account.
Whilst the grandson of the 7th Nizam, Mukarram Jah, who claims the title of 8th Nizam of Hyderabad and resides in Turkey, and his younger brother, Muffakham Jah, claim they are the beneficial owners as the fund was gifted to them in a trust by their grandfather set up on April 24, 1963, the Pakistan government says it was a payment made by the state of Hyderabad to Pakistan for arming Hyderabad when it was about to be invaded by India.
After Partition, the 7th Nizam chose for Hyderabad to remain independent. But Hyderabad was annexed to India as a result of Operation Polo between September 13 and 18, 1948.
During a two-week trial in the Business List of the high court, which concluded on Friday, Eason Rajah QC, representing Mukarram Jah, claimed the £1 million was passed to Rahimtoola on “trust for safe-keeping”.
But Pakistan’s argument is that the £1 million was a payment to Pakistan for arming Hyderabad against India in September 1948 and Pakistan being a sovereign state cannot be subjected to scrutiny by the English courts.
Paul Hewitt, a partner at Withers LLP, the solicitors representing the Mukarram Jah, told TOI: “His Exalted Highness Nizam VIII and his younger brother have waited decades to receive what their grandfather gifted them. Pakistan has blocked access for 70 years and we hope the recent trial will mean a final resolution at last.”
Mukarram Jah’s skeleton arguments, which TOI has a copy of, state that on September 15, 1948 Nawab Moin Nawaz Jung, the 7th Nizam’s finance minister, wrote to Rahimtoola asking whether in view of the situation developing in Hyderabad, in order to safeguard the interests of the state, could he transfer £1 million to his account. “This amount may kindly be kept by you in trust,” he wrote. “Moin took these steps to safeguard the fund in view of the invasion of Hyderabad by India,” Mukarram Jah’s arguments plead. But the transfer was not authorised by the 7th Nizam.
Pakistan, however, pleads: “The monies cannot sensibly or realistically have been transferred to Pakistan on the basis that Pakistan would hold them as agent or trustee for the Nizam, so that upon conquest of Hyderabad, India could compel the Nizam to transfer the monies to India. The transfer to the Rahimtoola account was a transaction between states, Hyderabad and Pakistan, entered into in highly political circumstances when Hyderabad was facing or subject to an unlawful invasion by India.”
Khawar Qureshi QC, representing Pakistan, states in his skeleton arguments that: “Hyderabad transferred the monies to the Rahimtoola account in order to compensate/reimburse/indemnify Pakistan in connection with the assistance she had provided the 7th Nizam and keep the monies out of the hands of India. Pakistan assisted the 7th Nizam by procuring the supply and/or transportation of weapons via Pakistan to Hyderabad, in support of Hyderabad’s attempts at self-defence against Indian aggression.”
The two-week trial ended on Friday and Justice Marcus Smith is expected to hand down judgment in a few months’ time as to both whether English courts have jurisdiction over the matter and who should get their hands on the money.
At one point the Indian government had a claim over the money too, but India and the two princes have reached a confidential agreement over this.
On July 8, 1954, once things had settled down, the 7th Nizam of Hyderabad together with the state of Hyderabad issued a writ before the UK high court against the government of Pakistan and Rahimtoola asking for the £1 million back. On July 19, 1955, Rahimtoola got the writ set aside on the basis the English courts were interfering with Pakistan’s sovereign immunity. The money has stayed frozen in the bank account ever since.
On June 11, 2013, out of the blue, Pakistan’s high commissioner to the UK put in a claim for the money. He was represented then by former British Prime Minister Tony Blair’s wife Cherie Booth QC. NatWest does not wish to release the funds until there is a court order.
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