Pakistan loses claim for Nizam of Hyderabad’s millions

Grandsons win British court battle over £35 million held in UK bank account for decades

The car collection of the late Nizam was the subject of a book by Mohammed Luqman Ali Khan. Courtesy Mohammed Luqman Ali Khan

The descendants of a fabulously wealthy Muslim ruler of pre-independence India have won a legal battle against Pakistan over £35 million held by a British bank since partition in 1947.

The dispute centred on £1 million transferred by a senior official days after the territory of the Nizam of Hyderabad was overrun by Indian troops in September 1948 following his failed attempt to remain independent of both India and Pakistan.

The Nizam was one of the world’s wealthiest men who was best-known for his collections of exquisite jewellery and luxurious cars and once reputedly used a 185-carat diamond as a paperweight. But with the end of Britain’s control of India, he was forced to strike a deal with the country’s new rulers to keep his wealth in return for ceding the vast swathe of south-central India that was home to 17.5 million mainly Hindu people.

The Nizam, who died in 1967, claimed to have known nothing of the finance minister’s transfer of the money to Pakistan’s high commissioner to the UK in 1948 – sparking a battle for its return to the family seven decades later.

The money, which has increased to £35 million with interest, has been frozen since an inconclusive court case in the 1950s but the legal dispute was reignited in 2013 when Pakistan tried to seize the cash.

Pakistan’s government claimed the money was payment for weapons to be smuggled to Hyderabad by a former Australian spy, Sidney Cotton, to help the Nizam build up his military to fight off Indian troops. But a judge ruled on Wednesday that the money was not a payment for arms and should be returned to the Nizam’s family.

The decision is a victory for the Nizam’s grandsons, Prince Mukarram Jah, 84, the current 8th Nizam now living in Turkey, and his younger brother Prince Muffakham Jah, 80.

“We are delighted that today’s judgment recognises his Exalted Highness the VIII Nizam’s rights to funds which have been in dispute since 1948,” said his solicitor Paul Hewitt. “Our client was still a child when the dispute first arose and is now in his 80s. It is a great relief to see this dispute finally resolved in his lifetime.”

The money will be divided between the brothers and the Indian state, which had also claimed the money. The terms of the agreement remain confidential.