India and Pakistan have brought their historic rivalry to the High Court in a battle over £35 million that has been stashed in London since partition in 1947.
British lawyers are trying to resolve a row that involves a cast of characters including a state ruler who lavished the Queen with diamonds and an MI6 spy who was convicted of gun-running during the first India-Pakistan war.
The dispute centres on £1 million that before the partition of India in 1947 was passed by the seventh Nizam of Hyderabad — the state’s monarch — to Pakistan’s ambassador for safe-keeping.
Nizams ruled Hyderabad, a landlocked state in southern India, from the beginning of the 18th century until the British left the sub-continent.
Records show that the seventh Nizam, who died in 1967, was not short of cash. When Princess Elizabeth married Prince Philip, the Nizam produced a wedding gift of a diamond tiara and a Cartier diamond necklace in a design based on English roses.
At the time of partition the seventh Nizam feared that his money — as well as the state’s sovereignty — would disappear. So it was salted away in the NatWest bank in London, where it has languished ever since, accruing interest to its present level of £35 million.
Now, two of the Nizam’s grandsons, the eighth Nizam, 84, and his brother, Prince Muffakham, 80, want the money back. Their claim is supported by India but Pakistan is adamant that it does not have to return the funds.
For the past two weeks Mr Justice Marcus Smith has been hearing arguments from the brothers’ lawyers as well as legal teams for India and Pakistan.
It is not the first time that Hyderabad royalty has attempted to recover the funds. In the 1950s Lord Denning, arguably the most famous British judge of the last century, sitting in the House of Lords, accepted the Pakistan government’s argument that it had state immunity from legal action. He ruled that the cash should stay put and stayed proceedings until 2013, when the Pakistani government instructed Cherie Blair, QC, wife of the former British prime minister, to try to retrieve the money.
Lawyers for Pakistan argue that the “international, military and political context” of the original transfer was clear: it was a response to India’s alleged violation of assurances from the British and the United Nations that India would not be allowed to invade Hyderabad.
Khawar Qureshi, QC, said: “Pakistan had assisted Hyderabad in her attempts at self-defence against Indian aggression by arranging the supply and trans- portation of arms to Hyderabad.” He added that the “fog of war and the clandestine operations which it entails inevitably loom large”.
According to lawyers for the Nizam, who lives in Turkey, Islamabad made its first claim on the money in the 1950s, arguing that it was a gift to “the Muslim people of Pakistan”. It later said that the money was payment for gun-running to Hyderabad provided through the clandestine services of Sidney Cotton, an Australian who worked for MI6 during the Second World War.
After India defeated the seventh Nizam and Hyderabad in 1948, Cotton was convicted in Britain of running guns under the Air Navigation and Transport Act 1920 and fined £200.
With the passing of time, however, allegiances have shifted. The eighth Nizam and his brother struck a deal with India and are now on the same side fighting Pakistan in the litigation.
Lawyers for the Nizam told Mr Justice Smith that “the determination of this claim has been stalled for too long”.
Paul Hewitt, a partner at the London law firm Withers, which represents the eighth Nizam, told The Times: “We are very pleased that, after more than 70 years, the English court will finally be able to decide who owns the money first deposited by our client’s grandfather.”
A judgment is expected after a period of at least six weeks.
