The High Court has ruled that £35 million held in a UK bank account should be inherited by the descendants of the Indian royal who transferred them in a legal battle which has spanned over 70 years.
In 1948, during the partition of India, £1 million was deposited into the bank account of the Pakistan High Commissioner in London by the last Nizam of Hyderabad. Over the years, the funds have accumulated interest and are now worth approximately £35 million.
The case originally reached the English Courts in 1954 when the Hyderabad royal family, who claimed that the money was transferred for the purpose safekeeping, challenged the commissioner and requested the return of the money. However, when the case reached the House of Lords in 1957, Pakistan asserted sovereign immunity and the case was effectively frozen until 2013, when Pakistan made the decision to waive their immunity by making a claim to the cash from the account. This action subsequently caused the descendants of the Nizam to make their own claim to the funds.
Pakistan claimed that the money had been transferred as payment for weapons which were intended to be used against the Indian army and therefore, the case was not justiciable in the UK as it concerned a foreign act of state. However, the court determined that it had the right to rule in the case, given that the money had been deposited in a British bank account.
Ultimately, the court did not find evidence to support Pakistan’s claim and instead ruled that the funds had been held on trust for the Nizam for his benefit, meaning that his successors are entitled to have the funds paid out to them.
India also made a claim to the funds, however, the Nizam’s relatives, Prince Mukarram Jah and Prince Muffakham Jah, reached an agreement with the government as to how the funds should be distributed in the event that the Princes were successful. Unless Pakistan appeal the decision, the funds are to be split as per that agreement.
This is an interesting case which addressed a wide range of issues such as limitation of acts and constructive trusts and required the court to assess evidence dating over 70 years.
By Amanda Holden, a paralegal in the Will, Trust and Estate Disputes team
"The court today made it clear that it did not think the money was handed to Pakistan outright. There is overwhelming evidence that Pakistan only held the money as a trustee and it actually belonged to the Nizam," Paul Hewitt, the lawyer for one of the grandsons, told the BBC's Gaggan Sabherwal.