Rahimtoola v Nizam of Hyderabad [England, House of Lords.]

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeViscount Simonds,Lord Reid,Lord Cohen,Lord Somervell of Harrow,Lord Denning
Judgment Date07 November 1957
Judgment citation (vLex)[1957] UKHL J1107-1
Date07 November 1957

[1957] UKHL J1107-1

House of Lords

Viscount Simonds

Lord Reid

Lord Cohen

Lord Somervell of Harrow

Lord Denning

Rahimtoola
and
H.E.H. The Nizam of Hyderabad and Others

Upon Report from the Appellate Committee, to whom was referred the Cause Rahimtoola against H.E.H. The Nizam of Hyderabad and others, that the Committee had heard Counsel, as well on Tuesday the 16th, as on Wednesday the 17th, Thursday the 18th and Monday the 22d, days of July last, upon the Petition and Appeal of Habib Ibrahim Rahimtoola, of 62 Queen's Road, Karachi-2, in the Republic of Pakistan, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 20th of December 1956, so far as therein stated to be appealed against, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order, so far as aforesaid, might be reversed, varied or altered, and that the Petitioner might have the relief prayed for in the Appeal, or such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of His Exalted Highness The Nizam of Hyderabad; and also upon the Case of Westminster Bank Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 20th day of December 1956, be, and the same is hereby, Set Aside, and that the Order of the Honourable Mr. Justice Upjohn, of the 30th day of July 1956, thereby discharged, be, and the same is hereby, Restored: And it is further Ordered, That the Respondent His Exalted Highness The Nizam of Hyderabad do pay, or cause to be paid, to the said Appellant Habib Ibrahim Rahimtoola and to the Respondents Westminster Bank Limited the Costs incurred by them in the Court of Appeal, and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Viscount Simonds

My Lords,

1

The question in this appeal is whether the Court of Appeal were right in refusing to set aside a writ of summons and all subsequent proceedings in an action brought by the Respondent the Nizam of Hyderabad against the Appellant and further refusing to stay all further proceedings in the same action against the Respondents Westminster Bank Ltd. An order to that effect had been made by Mr. Justice Upjohn but was reversed by the Court of Appeal.

2

In September, 1948, the Appellant, Habib Ibrahim Rahimtoola, was High Commissioner for Pakistan in the United Kingdom and he held that office until the 13th February, 1952. In that capacity he was bound to act upon the instructions of the Government of Pakistan normally given to him by the Foreign Minister Sir Mohammed Zafrullah Khan.

3

In the same month there were certain funds standing to the credit of the account of the Government of Hyderabad with the Respondent Bank. For the purpose of this appeal no distinction is to be made between the State, the Government and the Nizam of Hyderabad. The Nizam was an absolute monarch. His Finance Minister was then the Nawab Moin Nawaz Jung, whom I will call Moin, and the Agent General for Hyderabad in London was the Nawab Miz Nawaz June Bahadur, whom I will call Miz. Each of them was authorised to draw on this account and there was no ostensible limit to his authority.

4

On or about the 16th September, 1948, it was orally agreed between the Appellant and either Moin or Miz (it is not quite clear which) that the money then standing to the credit of the account should be transferred to an account in the name of the Appellant as High Commissioner for Pakistan, and in pursuance of that agreement he signed the necessary specimen signature forms and Moin, by a letter of the same date, instructed the Bank to transfer the moneys in question to the credit of the account of the Appellant. The Bank accordingly transferred such moneys, amounting to £1,007,940 9s. 0d. to the credit of an account entitled "To Habib Ibrahim Rahimtoola (High Commissioner for Pakistan in London)" and forwarded to him a credit advice showing this title. The Appellant has sworn that he agreed to accept and accepted the transfer as agent of the Government of Pakistan, that he did so on the express instructions of Sir Zafrullah Khan and that he has ever since regarded himself as bound to deal with such account as his Government may direct and that he is prosecuting this appeal on their instructions. I see no possible reason for doubting his assertion which every subsequent action of his supports. On the other hand, it is asserted by the Nizam that the action of Moin was unauthorised by him. When the matter was before Mr. Justice Upjohn the evidence was rightly regarded by him as inadequate, but in the Court of Appeal further evidence was admitted, an affidavit by the Nizam himself, containing his statement, which has not been challenged, that Moin had no authority to make the transfer in question. It has not, however, been imputed to the Bank or to the Appellant that Moin's ostensible authority was known by either of them to have been exceeded.

5

On the 27th July, 1953, the Appellant, who had then become Ambassador of Pakistan to France, acting on the instructions of his Government, requested the Bank to transfer the account to the name of Mr. M. A. H. Ispahani. then the High Commissioner for Pakistan in the United Kingdom, stating that the account would in future be operated by him and his successors in office. To this the Bank replied by a letter in which they stated that, as he was aware (and as the fact was), a claim had been made regarding the moneys in question by the Nizam's Government and that on 28th September, 1948, a Mr. Gupta as Financial Secretary of that Government had sent them a cable objecting to their action in making the transfer in question. They further stated that he would no doubt also be aware of the statement made in the Indian Parliament that the Indian Government proposed to file a suit for the recovery of the amount standing to the credit of such account. This last statement can be disregarded for it appears that, the State of Hyderabad having been dissolved, whatever rights that State or India as its successor had have been formally assigned to the Nizam.

6

Thus, my Lords, matters stood in July, 1953, and the Bank adopted the reasonable attitude that they could not admit the claim of either the Nizam or the Pakistan Government until their rights had been determined in proper proceedings. Accordingly on the 8th July, 1954, a writ was issued by the Nizam and the State of Hyderabad as co-plaintiffs against Moin, the Bank and the Appellant claiming payment of the sum of £1,007,940 9s. 0d. under three alternative heads, ( a) as money held in trust for the Nizam (in all that follows I ignore the State of Hyderabad), ( b) as money due and owing to the Nizam, ( c) as money had and received to the use of the Nizam. For the present purpose I can ignore other claims in the writ. A statement of claim was duly delivered to which the Bank put in a defence. A concurrent writ was by leave served out of the jurisdiction on Moin and the Appellant, and on the 19th July, 1955, the Appellant gave notice of motion (which was amended on the 4th September, 1956) for an order setting aside the writ and concurrent writ and all subsequent proceedings against the Appellant and the Bank. I pause to observe that the position of the Bank has throughout been one of impartial willingness to pay its debt to whomsoever it may be justly due but, reasonably enough, it is anxious not to have this action continued against it but not against the Appellant. This anxiety is shared by the Appellant and has determined the form of Order originally made by Mr. Justice Upjohn and the course of the argument on this appeal.

7

Upon the motion coming before that learned Judge with a number of affidavits on either side which add little, if anything, to the bare statement I have made, an Order was made in accordance with its terms. I have read and reread the judgment of the learned Judge, and I may perhaps be permitted to say that I find in it such a lucid exposition of the facts and relevant law that I should have been content to adopt it as my own and say no more but for the unfortunate fact that the Court of Appeal came to a different conclusion and set aside his Order. In my opinion, as I believe in that of all of your Lordships, they were wrong in doing so.

8

The first question is in what capacity did the Appellant accept a transfer of the funds in question and become the customer of the Bank to whom it was primarily accountable. It has been said that there are three possible views. The first is that he was acting as a private individual. This view is so clearly untenable that I will not say more about it. The other alternatives were stated thus by Lord Justice Romer: (1) that he was acting as "agent" for Pakistan and (2) that he was acting as the "organ" or "alter ego" of Pakistan, and that learned Lord Justice came to the clear conclusion that he accepted the transfer in his official capacity as servant or agent of Pakistan. On the other hand he could not accept the view that he was the "organ" or " alter ego" of Pakistan. If these, words or either of them connote that a High Commissioner is in the same sense to be identified with the Government he represents as is, for instance, a Department of State, I am...

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