India wants out-of-court settlement on Nizam’s millions

The Union Cabinet on Friday decided to opt for an out-of-court settlement with the Pakistan Government and the heirs of the Nizam of Hyderabad to resolve a 60-year-old-legal wrangle pertaining to Nizam’s funds lying in a London bank. The Cabinet, which met under the chairmanship of Prime Minister Manmohan Singh, also approved the strategy for negotiations that would be conducted over a period of 18 months, Union Minister Kapil Sibal said.

The Hyderabad Funds Case, began on September 20, 1948 when £1,007,940 and nine shillings was transferred from the Nizam’s funds to that of Habib Ibrahim Rahimtoola, the then High Commissioner of Pakistan in London. The transfer was allegedly made on the instructions of the Nizam’s finance minister without his consent. The funds are lying with the National Westminster Bank.

The discrepancies led to arbitration in British courts when Nizam’s instructions to re-transfer the funds were not complied with. Subsequently, the matter went up to the House of Lords, which held that the legal title to the money was vested in the Pakistan Government. But Pakistan failed to assert a beneficiary title.

“We decided to restart the negotiations with Pakistan to know how much the private beneficiary should get. This would not only release the funds locked up for the last 60 years but would also resolve a long-standing issue,” said Sibal. The funds are now valued around £30 million.