April 11, 2008 / 12:23 PM / 12 years ago

Out-of-court deal to unlock Nizam's millions

NEW DELHI (Reuters) - It is a riveting tale of royal intrigue, greed and international politics: a million pounds locked away in a British bank, sparking a row between two countries and the descendants of an eccentric Indian royal.

The story goes back almost 60 years, to around the time India, then a collection of princely states and British-run territory, and Pakistan became independent.

The Nizam of Hyderabad, a maharajah of fabled wealth, deposited a million pounds with the National Westminster Bank in London as he dithered over which of the two new nations to join.

As the Muslim ruler of an Indian territory the size of England and Scotland, he was attracted by the idea of joining the new state of Pakistan. But with landlocked Hyderabad hundreds of miles away from the Islamic state that posed problems.

While he procrastinated, his finance minister signed over the money in 1948 to an account at the same bank controlled by the Pakistan high commissioner to London.

Appalled, and under pressure from India, the Nizam cabled the bank to freeze the transaction. Soon afterwards, in September 1948, Indian troops annexed Hyderabad.

The story would be just a footnote in the tragic and traumatic history of the partition of British India were it not for the fact that the money remains locked in the London bank.

But on Friday, hopes were raised that the fortune — now expected to have grown to about 30 million pounds — may be retrieved, after India said it would negotiate an out-of-court settlement with Pakistan and the descendants of the Nizam.

In 1957, after several rounds of litigation between the Nizam and the Pakistani government, the case reached Britain’s House of Lords, which ruled that the account could only be unfrozen with the agreement of all the parties.

“Some tentative sort of understanding was arrived at, but because of a time lag, that could not be implemented and so we are re-starting the negotiation process,” Kapil Sibal, Indian minister for science and technology, told reporters.

The negotiations would be conducted over 18 months, including with the Nizam’s grandson, now living in Istanbul in a small apartment after losing much of the family fortune.

The legal imbroglio has been complicated by the late Nizam’s past promiscuity — he is reported to have impregnated 86 of his mistresses, siring more than 100 illegitimate children and a sea of rival claimants.

“So how much should the private beneficiary get and then what should be the distribution between the government of India and Pakistan will be negotiated,” Sibal said.

A frail, devout Muslim, the Nizam was such a miser that he reportedly wore a tattered fez for 35 years, wore crumpled pyjamas and ate all his meals off a tin plate.

During his lifetime, trucks loaded with gold ingots lay rusting while his jewellery collection was said to be so large the pearls alone could fill many rooms.

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