UK high court dismisses Pakistan's claim to £35 million over Hyderabad's Nizam's funds, rules in India's favour

New Delhi/Islamabad: Rejecting arguments by Pakistan, the UK High Court on Wednesday ruled in favour of India in a 70-year-old legal dispute involving 35 million pounds that belonged to the seventh Nizam of Hyderabad during the state`s accession to India.

In Wednesday`s judgment, the UK High Court rejected Pakistan`s claim that the Fund had been intended as payment for arms shipments or as an outright gift.

The Court held that beneficial ownership in the Fund as at 1948 lay with the seventh Nizam, and that it had been held on trust to his benefit and that of his successors in title since then.

Having found that the seventh Nizam was beneficially entitled to the fund, the Court concluded that those claiming in right of the Nizam i.e.India and the two grandsons of Nizam were now entitled to have the Fund.

The Fund is being kept in London`s National Westminster Bank. It was being held in the account of the High Commissioner of Pakistan to the UK Rahimtoola since September 1948.

Pakistan said it is closely examining all aspects of the UK High Court`s ruling and would take further action in the light of legal advice received. The Fund had been the subject of earlier proceedings in the 1950s in which the UK House of Lords set aside the proceedings brought by the seventh Nizam of Hyderabad claiming the fund as Pakistan invoked state immunity.

In 2013, Pakistan began fresh proceedings in the case, thereby waiving state immunity. A subsequent attempt by Pakistan to discontinue the proceedings was rejected as an abuse of process by the UK Court.

On Wednesday, the Court issued a wide-ranging judgment after analysing documentation going back more than 70 years and embracing the law of constructive and resulting trusts, unjust enrichment, foreign act of state, illegality and limitation of actions, the MEA said in a statement.

The Court rejected arguments advanced by Pakistan that the dispute was non-justiciable, either in whole or in part; that the doctrine of illegality somehow barred recovery; or that the claims of other parties were time barred.

The Court held that Pakistan`s pleading of limitation was an "abuse of process", and that remedies in trust law and restitution were available against both Pakistan and the Bank.

The Pakistan Foreign Office said the UK High Court`s judgement "rejects the longstanding claims of the two major parties and upholds the claims of the heirs of Nizam of Hyderabad".

"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 civilized norms, leading the Nizam of Hyderabad to make desperate efforts to defend his people and the state from Indian invasion," it said.

"The Nizam also raised the matter with the UN Security Council where the issue remains on the agenda to date. The Nizam as a sovereign approached Pakistan for assistance which the Government of Pakistan provided.

"Pakistan is closely examining all aspects of the detailed judgment and will take further action in light of legal advice received," the Foreign Office said.