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Wednesday, March 25, 2015

UK Court directs Pakistan to pay GBP 150,000 to India as legal fee !!!!

On 15th Aug 1947, the Great Nation got its freedom … do you know of the case arising out of transfer of funds across 1600 km approx becoming subject matter of a Court that is situate almost 7000 km away !  ~  Sovereign immunity is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil proceedings or criminal prosecution. The doctrine stems from the ancient English principle that the monarch can do no wrong.

Sure, you would have read about the news in all dailies of ‘UK Court asking Pakistan to pay GBP 150,000 [Rs. 1.39 crores approx]  to India as legal fee’. In a setback to Pakistan, a UK court has directed Pak to pay 150,000 pounds to India as legal fees in the 67-year-old Hyderabad Funds case involving the Nizam's money while terming Pakistan's behaviour as "unreasonable". Holding that Pakistan has no "sovereign immunity" in the case, the Judge ordered the Pakistan High Commissioner here to pay the legal costs incurred by the other respondents in the case relating to the 'Hyderabad Funds' which is currently valued at 35 million pounds.

It is understood that the legal costs of the respondents - Govt of India, the National Westminster Bank and the Nizam's heirs Mukkaram Jah and Muffakham Jah - are approx 400,000 pounds. Of this India has been paid 150,000 pounds, the National Westminster Bank 132,000 pounds and the Nizam's heirs about 60,000 pounds each respectively. The immunity waiver under the verdict, which has opened the doors for India to recover the frozen funds through legal process, is irrevocable.

It is also stated  that the Indian government and the heirs of Nizam are holding consultations on the subject. Newspaper reports suggest that this case, known as the 'Hyderabad Funds Case', relates to transfer of 1,007,940 pounds and 9 Shillings to a London bank account in the name of the High Commissioner in the UK for the then newly formed state of Pakistan, Habib Ibrahim Rahimtoola, at the Westminster Bank (now Natwest) in 1948.  The money was transferred by an agent who appeared to be acting on behalf of the absolute ruler of one of the largest and richest of the Indian princely states, the seventh Nizam of Hyderabad.

Upon partition of the country, the Nizam of Hyderabad wanted to be independent.  On Sept. 1948, Hyderabad was annexed to India and a couple of days later this transfer of money reportedly occurred.  However, on 27th Sept. 1948, the Nizam sought to reverse the transfer claiming that it had been made without his authority.  The Bank was unwilling to comply with the Nizam's request without the agreement of the account holder. Such consent was not forthcoming, and for a number of years matters remained unresolved.

With Hyderabad being a part of the India, the Nation has been staking its claim over the money as it was State fund and not the private money of Nizam.  The legal entanglement has remained elusive to settlement.  The recent judgement in London’s High Court of Justice tilts the 67 year old case in favour of India.   Over the years, when India had to deal with Pak bilaterally, because in 1957,  Islamabad invoked its right to sovereign immunity from court proceedings in Britain.

On the financial dispute, in 2013,  Islamabad decided to claim the funds and reopened legal proceedings.  The success through the legal route appears brighter.  It is stated that the transfer of such a high amount was made without Nizam’s consent.   In 1954 the matter reached the British courts after the erstwhile Nizam and the State of Hyderabad (part of India)  challenged the transfer saying it had been done without the erstwhile ruler's consent. The matter went to the House of Lords. In 1957 the House recognized Pakistan's right to invoke sovereign immunity but noted that legal proceedings to determine ownership would now be blocked forever. In 2013 Pakistan filed a legal claim against the National Westminster Bank for full recovery.

There were reports suggesting that the members of Nizam family had written to  Pakistan President Asif Ali Zardari, urging him to reciprocate to India's offer of an out-of-court settlement.  Immediately after the transfer, India raised an objection to the transfer, saying the Nizam was not an independent ruler and prevailed upon the bank to freeze the account. Since then the matter is hanging fire.

In 2008, reportedly, Indian government decided to pursue an out-of-court settlement with Pakistan and the heirs of the Nizam. The cabinet took the decision after Nizam's descendants met Prime Minister Manmohan Singh and then foreign minister Pranab Mukherjee.  A cultural advisor to the Nizam’s Trust was quoted as saying that Nizam's heirs may get 20 percent of the money while the lion's share will go to India.  Of the Nizam's 34 children, two sons and three daughters are still alive while there are a total of 104 grandchildren.

In India, the Privy Purse was a payment made to the royal families of erstwhile princely states as part of their agreements to first integrate with India in 1947, and later to merge their states in 1949 whereby they lost all ruling rights.   In 1947 there were more than 560 such princely states in India, and by the eve of independence, most of the States signed Instrument of Accessions to India Kashmir, Junagadh and Hyderabad  were integrated later.  In  1949 they were all  fully merged with India to form new states.

The motion to abolish Privy Purses,  that had been defeated in Rajya Sabha earlier was successfully passed as the 26th Amendment to the Constitution of India in 1971. The then Prime Minister Mrs.  Indira Gandhi argued the case for abolition based on equal rights for all citizens and the need to reduce the government's revenue deficit.  The last ruler of Nizam was Mir Osman Ali Khan between 1911 and 1948.   During his days as Nizam, he was reputed to be the richest man in the world, having a fortune estimated at US$2 billion in the early 1940s.  The Nizam's vast inheritance was accumulated as mining royalties. 

The proposal for independence was rejected by the British government,  then the Nizam opened negotiations with the Government of India ;  concurrently encouraged the activities of the Razakars. The Nizam cited the Razakars as evidence that the people of the state were opposed to any agreement with India.  Ultimately in a swift battle, the Nizam soldiers and Razakkars gave up easily. 

The Indian common man are not fully aware of the fact that so many crores of State’s funds were transferred in favour of Pak [later disputed by Nizam] and frozen in bank due to the legal battle.  1629 km is the distance from Hyderabad, India, to Lahore, Pakistan and .. 6707 km is the distance between New Delhi to London.

With regards – S. Sampathkumar
25th Mar 2015. 

Photo of Indian Independence in 1947 – source and ownership of photo not known.  If violating any copyright, will be removed immediately upon info.

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