Spoils of an India-Pak 'war', the legacy of a Nizam long dead and his many claimants

It is a case that brings back memories of the embers of Partition fire, the whiff of deviousness of the retreating Raj and of the last Nizam of Hyderabad, profiled by the Time magazine in 1937 as the world’s richest man who wanted to remain independent or join Pakistan.

What has come to be known as the ‘Hyderabad Fund Case’ is a heady cocktail of contested history and betrayal, involving a wealthy ruler, Mir Osman Ali Khan, and his secret money stashed away in a British bank, two warring nations and a 71-year-long legal battle.

Add to this a long list of claimants over ₹306 crore bonanza, now decided by a British court in favour of the Indian government and legal heirs of Nizam, and you have a veritable legal thriller on cards.

How it all began

Even a year after India gained independence, Hyderabad was still in a state of flux with the seventh Nizam, Mir Osman Ali Khan, refusing to join the Indian Union and contemplating several options, including joining Pakistan. It was during this period that the richest prince was busy consulting his advisors on his future course of action and simultaneously planning to purchase weapons to resist Indian takeover of his dominion.

On September 16, 1948, a day before the Nizam’s forces surrendered before the Indian Army, paving the way for Hyderabad’s merger with the Indian Union, the action had shifted to London where his envoy and foreign minister Moin Nawaz got in touch with the Pakistan high commissioner and asked him to accept £1 million for “safe-keeping”.

The actual transfer of the fund to the then-Pakistan high commissioner Habib Ibrahim Rahimtoola’s account at the NatWest Bank happened four days later on September 20, 1948. The money was apparently meant for buying weapons to fight the Indian forces in the event of an “invasion by India”. Compared to the fabulous riches which the Nizam possessed, this amount meant a small change for him.

However, the subsequent developments, in the wake of ‘Operation Polo’ by the Indian Army, forced Nizam to surrender and agree to a merger. On the funds, later he changed the line, claiming that he never authorised transfer of funds in favour of Pakistani high commissioner. The Nizam sought the return of the amount, a request turned down by the bank on the ground that the funds could be released only if Pakistan, which held the legal title to the amount, gave its consent. The House of Lords then directed the bank to freeze the account.

Consequently, the Nizam, with the backing from Indian government, took legal recourse and filed a suit in London court in 1954, initiating proceedings against the bank. However, the efforts failed due to Pakistan’s sovereign immunity.

Meanwhile, the Nizam created a trust for his grandsons — Mukarram Jah and Muffakham Jah — in 1965 and assigned to the President of India his claim to the fund. He died two years later.

Along with his two grandsons, there are nearly 120 descendants who are part of the Nizam estate.

In 2013, Pakistan discarded its claim of sovereign immunity and made an absolute claim on the fund, thereby setting up the present case. The matter was then placed before the High Court of Justice-Business and Property Courts of England and Wales.

India and the descendants of the Nizam (Mukarram Jah and Muffakham Jah) were on one side and Pakistan on the other. The descendants say that they are the beneficial owners of the fund which was given to them as a gift by their grandfather in a trust set up in April 1963. However, Pakistan claimed that the money was taken as payment for supplying weapons to Hyderabad during its annexation in September 1948.

The weapons, Pakistan claimed, were for the Nizam to protect the then-princely state of Hyderabad against India’s invasion to annex it.

Rejecting the arguments made by Pakistan, the court recently ruled that the money must go to the descendants of the Nizam and India.

“Although the Government of Hyderabad was involved in the purchase of weapons in order to resist what Nizam VII saw as attempts by India forcibly to annex Hyderabad, and although the Second Account was used to pay for some of these weapons, I do not consider that the transfer had anything to do with the purchase of weapons or the compensation of Pakistan (in any way) for the purchase of weapons,” Justice Marcus Smith said in his October 2 order.

“The Princes and India — are entitled to have the sum paid out to their order,” the judge ruled while keeping Pakistan completely out of the equation.

The money which has remained in the account at the National Westminster Bank now amounts to an estimated value of at least £35 million (₹306 crore).

The court rejected Pakistan’s argument that because India’s annexation of Hyderabad was “illegal”, it should have no right to the funds. Pakistan has been given four weeks’ time to go for an appeal.

Claimants galore

Now that the court has given its verdict in favour of the Nizam’s legal heirs and India, the focus will turn to the distribution of the money among the claimants.

There was an agreement between Indian government and the Nizam Estate over sharing of the amount in the event of a favourable verdict. However, it is a secret agreement and the details are not in public domain.

At this point, it is not clear whether the Centre will claim its share at all.

As per the court order, the claimants will now need to sit with the Indian government and strike an agreement which will then be presented before the judge for final approval before the disbursal of the money.

Nawab Najaf Ali Khan, one of the grandsons of Mir Osman Ali Khan, claimed that it was he who took the initiative to get the money stuck in the bank by digging out old records and holding negotiations.

“If those two grandsons are the only claimants as being claimed, why were they sitting quiet till 2013?” he asked.

He claims that he had a solicitor in London to fight the case till 2016 but he was subsequently persuaded to come under the Nizam Estate to jointly fight the case.

Khan, who claims to be representing the interest of 120 descendants, said they were party to the agreement between Nizam Estate and the Indian government to jointly fight the case. They were assured that the money will be distributed among all legal heirs of Nizam.

“If the two brothers deny us our share, we will go to court. We will not keep quiet,” said Najaf Ali Khan.

Family sources said that only those members of the Nizam family who were impleaded in the case will get the money. Their share will be known only after the family submits the claim details to the court.

One big family

The last Nizam had 18 sons and 16 daughters. After Hyderabad acceded to India, he was appointed the ‘Rajpramukh’ of the state in 1948. He held the administrative post till 1956 when the title was abolished.

He had bypassed his eldest son Azam Jah Bahadur, the Prince of Berar, to name the latter’s son Mukarram Jah as his successor.

Following Mir Osman Ali Khan’s death in 1967, Mukarram Jah became the titular Nizam. Mukarram Jah, who turned 85 on October 6, spent most of his life abroad — Australia and Turkey. Married five times, he is said to have lost much of his wealth in divorce settlements. He now lives in Turkey. His brother Muffakham Jah, who shuttles between India and the UK, was vital to the case and gave evidence which was relied on by the judge to reach his verdict.

About 400 family members of the Nizam clan, mostly 5th and 6th generation, are settled in Hyderabad, other parts of India and abroad.

Mixed appeal

The Nizam’s legacy evokes mixed reactions among present-day political parties. He is revered in some circles for developing Hyderabad and establishing educational institutions, hospitals and promoting communal harmony. However, his rule was tainted by the atrocities unleashed on the people of Telangana by Razakars, the armed militia set up by the Nizam.

The BJP, which is keen to make inroads into Telangana, has been demanding that September 17 be observed as “Liberation Day” to mark the integration of the region into Indian Union.

It is an emotive issue around which the saffron party now wants to weave its political campaign to capture power in Telangana in the 2023 Assembly elections.

The All India Majlis-e-Ittehad-ul-Muslimeen (AIMIM), a formidable political force in Hyderabad and an ally of the ruling Telangana Rashtra Samithi (TRS), is opposed to any narrative that denigrates the Nizam’s rule.

The TRS has so far rejected the demand for celebrating the Liberation Day, keeping in view the sensibilities of the minorities.