United Kingdom court decided the ownership of the £35-million Nizam’s Fund lying in London since 1948. This ends an interesting chapter about the annexation of Hyderabad State by India. Initially, this Fund was only £1 million, and grew with compound interest. The State of Hyderabad was a monarchy, and almost everything in it was the private property of the ruler, Nizam VII. The UK Court recognised his status: “Prior to 1950, Hyderabad was not a part of India, and the property of the Nizam and the property of the Government of Hyderabad were (as will be seen) indistinguishable”.
The Nizam wanted to ensure an independent State of Hyderabad — which was opposed by India. To assist Hyderabad’s diplomatic and military efforts, £2 million were transferred from the Hyderabad State Bank’s government account to the Imperial Bank of India branch in London in October 1947 at the instance of Nawab Moin Nawaz Jung, Finance and Foreign Minister.
From this account, a million pounds each were transferred to two other accounts in Moin Nawaz Jung’s name in Barclays Bank and Westminster Bank. Zahir Ahmed, the Foreign Secretary, and Nawab Mir Nawaz Jung Bahadur, the Agent-General of Hyderabad in London, were authorised to operate the accounts with Barclays Bank (First Account) and Westminster Bank (Second Account), respectively.
With the Indian Army takeover, the Nizam accepted the resignation of the Hyderabad Government on September 17, 1948, and on September 22, both banks were instructed not to allow any transactions. These instructions were carried out concerning the First Account. As far as the Second Account is concerned, on September 20, Moin (though no longer a minister) and Mir transferred the million-pound balance to a new account in the name of the High Commissioner of Pakistan in London.
The newly-elected Government of Hyderabad State passed a Cabinet Resolution on June 1, 1953 and “decided to release its right to the said amount and any other amount standing in the name of the said Moin Nawaz Jung Bahadur in the said Barclays Bank in the United Kingdom to His Exalted Highness the Nizam”.
The government, by a letter dated June 4, 1953 (three days later!) demanded that the Nizam now give a written undertaking that he would return the money on its receipt to the Government of Hyderabad! The Nizam’s secretary wrote back saying: “it does not appear to be necessary to give a separate letter to the above effect, as His Exalted Highness’s word is quite enough”! Eventually, the balance of £411,065 in the First Account was returned in August 1954.
As for the Second Account, the Nizam filed a suit in 1954 against the Westminster Bank and Pakistan’s London High Commissioner for recovery of his funds. However, UK’s highest court, the Privy Council, upheld Pakistan’s claim of sovereign immunity, and the case was stayed.Once again, by a deed dated October 27, 1956, the Government of Hyderabad assigned the Second Account to the Nizam VII before Hyderabad State was liquidated on November 1, 1956. Thus, the Hyderabad government legally made the Nizam the sole and legitimate claimant for both accounts.
On January 3, 1962, the Nizam wrote to Home Minister Lal Bahadur Shastri proposing a solution. The GOI accepted it on October 23, 1962 — three days after the start of the Indo-China conflict. The proposal may have something to do with the GOI request to the Nizam for gold for the defence effort. Based on this agreement, in 1963, the Nizam transferred (“settled”) his rights to a Trust Fund with the Bank of Nova Scotia Trust Company (Bahamas) Limited.
The Nizam’s proposal was also ratified on November 16, 1964 by Prime Minister Lal Bahadur Shastri’s Cabinet. In 1965, the Nizam “appointed” his two grandsons — Prince Mukharam Jah (later Nizam VIII) and Prince Muffakham Jah as the only beneficiaries of the Trust Fund and informed GOI. However, later in 1965, the Government of India changed its mind and got the Nizam to execute a deed “assigning” the Fund to the Government of India! As the UK court stated: “It will readily be appreciated that it is not possible for the same person validly to alienate the same property twice over. Nizam VII’s actions through the 1963 Settlement, the 1965 Appointment and the 1965 Assignment created rival claims to the Fund as between the princes on the one hand and India on the other”.
On February 7, 1967, shortly before his death, the Nizam wrote to Prime Minister Indira Gandhi, stating that he had contributed nearly 411.62 kilograms of antique gold coins of numismatic value to the national effort after the 1965 Indo-Pakistan war in exchange of gold bonds. He had proposed that instead of the gold bonds, the Fund be released to him personally.
The case recommenced after Pakistan waived its sovereign immunity. After extended hearings, the court decided that Pakistan had no claim and that the Fund belonged to the Nizam personally. It also said: “The administrator of the estate of Nizam VII is a party to these proceedings so that any other person claiming through Nizam VII is bound by the result”. It decreed to allocate the Fund as per the agreement between the two princes (who had already transferred their rights to two private companies) and the Government of India. The 71-year-old saga has now ended.
This case reveals the complicated and devious manoeuvres of the officials of the governments of Hyderabad, Pakistan and India. The extent to which they went to make contradictory, unfair and foolish moves does not confer any credit on them. The court went out of the way to complement one person: “Prince Muffakham gave evidence on his own behalf on Day 2 (June 11, 2019) of these proceedings. He was a careful and transparently honest witness......In an honest and open response — and this was entirely characteristic of Prince Muffakham — Prince Muffakham laid bare the limits of his knowledge”. At least one person has come out honourably from this mess!
This case reveals the complicated and devious manoeuvres of the officials of the governments of Hyderabad, Pakistan and India. The extent to which they went to make contradictory, unfair and foolish moves does not confer any credit on them