India has approved an out-of court settlement with Pakistan and the heirs of the Nizam of Hyderabad to end a 60-year-old row over the future of £1 million transferred to a British bank in 1948.
The money was ‘illegally’ transferred to the National Westminster Bank account of the then Pakistani High Commissioner in London. The deposit is now worth £31.9 million (nearly Rs 250 crore) and New Delhi intends to broker a compromise with the two heirs of the Nizam of Hyderabad and Pakistan.
“This would release funds lying locked up with a British bank for the last 60 years and a resolution to one long-standing issue on the India-Pakistan agenda,” Science and Technology Minister Kapil Sibal said on Friday after the Cabinet cleared the plan for an out-of-court settlement. <b1>
He said the negotiations would be conducted over 18 months.
The story about the money – and the dispute – has its origin during Partition and the attempt by leaders to keep the princely states together. On September 20, 1948 one million pounds maintained in the account of the Nizam of Hyderabad’s government in National Westminster Bank were transferred to an account of Habib Ibrahim Rahimtoola, the then Pakistani High Commissioner to Britain.
The transfer was made on the instructions of the Nizam’s finance minister but without authorisation by the Nizam’s government. “These instructions were irregular as the finance minister did not have the power to withdraw the money without the express sanction of the Nizam or the government,” an official said.