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Nizam case: India gets its share of £35m

Nizam case

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In News:

  • The high commission of India in London has received its share of the £35 million (Rs 325 crore) stuck in a National Westminster bank account since September 20, 1948.
  • It was in a legal dispute as Pakistan was also laying claiming to it.
  • Pakistan has also paid the Indian government £2.8 million (Rs 26 crore) as 65% of India’s legal costs in fighting the case in the London high court.

What is Nizam Fund Case?

Nizam case
Nizam case chronology

Background of the case:

  • Following the partition of India, the Nizam of Hyderabad wished to remain independent much against the wishes of the local populace.
  • Hoping Hyderabad could be third pocket of Pakistan (East Pakistan, now Bangladesh, was the second), Pakistan actively supported the Nizam.
  • The Nizam apprehended a military action from India and sought arms and weapons from Pakistan.
  • Nawab Moin Nawaz Jung, the finance minister and the foreign minister of the Nizam of Hyderabad transferred Sterling Pound 1,007,940 to Pakistani High Commissioner to the UK Habib Ibrahim Rahimtoola’s account on the behalf of the Nizam.
  • Under compelling circumstances, Hyderabad was annexed in 1948.
  • Later, the Nizam said that his minister transferred money without his approval and in 1954 moved to UK court seeking release of the money deposited with the Pakistani high commission.
  • However, Pakistan did not intend to oblige and invoked sovereign immunity. This means the case could not proceed further and remained dead till 2013.
  • In between, the Nizam created a trust for the welfare of the people which was to be funded from the interest of his Hyderabad Fund.
  • In 1960s, he appointed trust to his grandsons (the current claimants) and assigned his claim to the fund to the President of India.
  • The descendants of Nizam VII- Mukarram Jah (Titular Nizam VIII) and his younger brother Muffakham Jah joined hands with the Indian government and laid claim to the amount.
  • While the Nizam’s descendants stated that they were the beneficiary owners of the fund, as it was given to them by their grandfather as a gift in a trust that was set up in April 1963, Pakistan claimed the money to be the payment for supplying weapons to Hyderabad.
  • In 2013, Pakistan sued the National Westminster Bank, the custodian of the Nizam’s fund. This revived the old suit as Pakistan’s filing of case against the bank meant the country waiving off sovereign immunity it invoked 65 years ago and the trial began.
  • The court ruling came after 6 years in which it ruled in favour of India and Mukarram Jah, the titular 8th Nizam of Hyderabad, and his younger brother, Muffakham Jah.

UK Court Ruling:

  • The UK court dismissed Pakistan claim on Hyderabad Nizam’s fund and recognized the claim of India and the grandsons of Nizam Mir Osman Ali Khan.
  • The court left it to the Princes and India to divide the money among themselves.

What’s the Hyderabad Funds?

  • In 1948, Hyderabad’s Finance Minister transferred £1 million to the Westminster Bank (Now NatWest Bank) account of Habib Ibrahim Rahimtoola, then Pakistan’s high commissioner in London.
  • The money has since grown to £35 million (Rs. 306 Crore). Mir Osman Ali Khan, then Nizam of Hyderabad, said he had no knowledge of the money transfer and it was done without his approval.
  • The money in the frozen account is popularly known as Hyderabad Fund.
  • Claimants: Mir Osman Ali Khan, his grandsons Mukarram Jah (the present titular head) and Muffakham Jah, other members of the Nizam’s family, India (which entered into a pact with the Nizam’s family) and Pakistan.
  • The Dispute: Initially between Mir Osman Ali Khan and Pakistan. India also claimed the money as the Nizam had in 1965 assigned his claim to the fund to the President of India.
  • Where will the money go: It will be distributed between the Indian government and the legal heirs of the Nizam.

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