Hyderabad Nizam case: London High Court orders Pakistan to pay £6m in legal costs

LONDON: A UK High Court judge has ordered the Pakistan government to pay nearly £6 million in legal costs after Pakistani representative told the court that it will not be appealing against London High Court’s decision which ruled in favour of Nizam of Hyderababad’s descendants granting them right over £35 million funds.

On Thursday, Justice Marcus Smith, sitting in the Rolls Building of the London High Court for a “consequentials hearing” ordered Pakistan to make payments, mainly to the Nizam’s descendants, Prince Mukarram Jah, the titular eighth Nizam of Hyderabad; his younger brother Muffakham Jah; Indian government and the Natwest bank.

Pakistan has been ordered to pay £1,835,445.83 (65 per cent on account of costs) to Prince Muffakham Jah; £2,802,192.22 to India; £795,064.63 (65 per cent on account of his costs) to HEH VIII Nizam; and £367,387.90 in respect of the bank’s costs (the bank’s costs have already been paid from the fund so Pakistan is reconstituting the fund in respect of those costs). “Today’s hearing brings this litigation, which started in 2013 but where the underlying dispute dates back to in 1948, to an end at long last,” said Paul Hewitt, partner at Withers LLP, the law firm which acted for the eighth Nizam.

“We are pleased that Pakistan has decided not to contest Mr Justice Smith’s judgment. Our client His Exalted Highness the VIII Nizam will now have access to the funds which his grandfather, HEH the VII Nizam, intended him to have,” he said.

Pakistan’s legal team told this reporter that it had received instructions from the government not to appeal against the decision. A Pakistan High Commission source said the matter of legal costs and the court order will be placed before the next cabinet meeting and a decision will be taken then. The source said Pakistani government was already aware and Attorney General Anwar Mansoor held meetings in London few days ago where decision was taken not to appeal against the decision.

In October this year, Justice Marcus Smith had ruled that £35 million held in a Natwest account must go to the descendants of Indian royal Nizam of Hyderabad because Pakistan lacked evidence to prove its claim to £35 million held in the account and claimed jointly by the two sons of Nizam and Indian government.

The dispute started in 1948 when the last Nizam of Hyderabad Mir Osman Ali Khan deposited £1m in the UK account, held by the then Pakistan high commissioner, for safe-keeping because the then Nizam didn’t trust India and requested Pakistan to keep money for him. The seventh Nizam of Hyderabad had refused to join either India or Pakistan but he trusted Pakistan more than India.

Hyderabad in 1947-48 was a princely state and was annexed by India in 1948 in a military operation. The Nizam transferred money to London shortly before the annexation. The money was transferred into an account in the name of the then Pakistan high commissioner to the UK, Habib Ibrahim Rahimtoola. For over 70 years, the sum accursed interest and its now valued £35m. The descendants of Nizam had joined hands with the Indian government in the legal battle against Pakistan.

Nizam VII had sought the return of the funds in the 1950s, claiming that the transfer had been made without his authority. The bank took the stance that it was unwilling to return the fund without the agreement of Pakistan, which had legal title to the fund.

The case reached the House of Lords, which held that the question of who owned the fund could not be decided because Pakistan had claimed sovereign immunity. In 2013 Pakistan waived her sovereign immunity by issuing a claim for the fund that opened the way for the current case to proceed.

The court issued notice to Nizam’s sons informing them about Pakistan’s claim. Former high commissioner Wajid Shamsul Hasan confirmed that the high commission then requested to withdraw the case but the court refused to grant permission.

The National Westminster Bank, in which the money had been deposited, refused to release the funds to either party until the case was resolved by the courts.

Pakistan argued through evidence that it had been given the money by Nizam in order to procure arms but the court determined it had the right to rule in the case, given that the money had been deposited in a British bank account and the heirs had a case. Sons of Nizam argued that Pakistan only held the money as a trustee and it actually belonged to the Nizams who were the legal beneficiaries.

“Nizam VII (Mir Osman Ali Khan) 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,” Justice Marcus Smith of the Royal Courts of Justice ruled.

“Pakistan’s contentions of non-justiciability by reason of the foreign act of state doctrine and non-enforceability on grounds of illegality both fail,” the order further read.

The Pakistan Foreign Office in October said the judgment rejects the longstanding claims of the two major parties and upholds the claims of the heirs of Nizam of Hyderabad.

A statement said: “The ruling does not take into account the historical context of the transfer when India illegally annexed Hyderabad in violation of International Law and all civilised norms, leading the Nizam of Hyderabad to make desperate efforts to defend his people and the state from Indian invasion,” said the statement issued by the foreign office.