Colonial-era Indian royal family wins right to $45 million stashed in London since 1940s

LONDON -- A decades-old legal dispute between the state of Pakistan and colonial-era Indian royalty has finally been settled, with the U.K. High Court recognizing the rights of the Indian royals to $45 million that has remained untouched in a London bank account since 1948.

The highly complex case involved the transfer of $1.3 million made by the Nizam Osman Ali Khan, the last monarch of the princely state of Hyderabad, to the Pakistan High Commissioner in London in 1948.

The royal Nizams of Hyderabad were among the richest dynasties in colonial-era India, known for their grand Chowmahalla Palace residence and lavish displays of wealth. The seventh and final Nizam, who in the 1940s was one of the wealthiest men in the world, gave Queen Elizabeth II a diamond tiara and a diamond necklace made by Cartier as a wedding gift when she married Prince Philip.

But in 1947, when the British Empire collapsed and the modern, independent India was preparing to take back Hyderabad from princely rule, the Nizam feared for his financial interests and sent money to the Pakistan High Commission in London for safe keeping. When the Nizam asked for it back a few years later, the Pakistani authorities refused.

The Nizam's grandsons, the eighth Nizam, Mukarram Jah, 84, and his brother Muffakham Jah, 80, who were children when the dispute began, now stand to inherit the money. The Pakistan legal team unsuccessfully argued that the payment was made in return for arms smuggling services as Hyderabad prepared to defend against invasion from the newly independent Indian state in 1948.

When Nizam Osman Ali Khan tried to recover the funds from the bank account in the 1950s, Pakistan refused. The case then went to the House of Lords, then the highest court in the land, and Pakistan successfully argued that as a sovereign nation, it could not be sued, meaning the money would be locked away.

However, Pakistan waived that right to not be sued when the case was reopened in 2013, as Pakistan launched a legal challenge to try and unlock the funds in order to claim full ownership of the $45 million.

Neither party were able to access the funds -- until now.

"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," Paul Hewitt, a partner at the Withers LLP law firm who represented the Hyderabad royals, said in reaction to the news. "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."