The High Commissioner for Pakistan in the United Kingdom v Prince Mukarram Jah, His Exalted Highness the 8th Nizam of Hyderabad

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Marcus Smith
Judgment Date02 October 2019
Neutral Citation[2019] EWHC 2551 (Ch)
Date02 October 2019
Docket NumberClaim No.: HC-2013-000211

[2019] EWHC 2551 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES (ChD)

BUSINESS LIST

Rolls Building

7 Rolls Buildings

Fetter Lane

London EC4A 1NL

Before:

THE HONOURABLE Mr Justice Marcus Smith

Claim No.: HC-2013-000211

The High Commissioner for Pakistan in the United Kingdom
Claimant
and
(1) Prince Mukarram Jah, His Exalted Highness the 8 th Nizam of Hyderabad
(2) Prince Muffakham Jah
(3) Shannon Consulting
(4) The Union of India
(5) The President of India
(6) Hillview Assets Holdings Limited
Defendants and Interpleader Claimants

and

(7) The Administrator of the Estate of the 7 th Nizam of Hyderbad
Defendant

and

National Westminster Bank Plc
Defendant and Stakeholder

Mr Khawar Qureshi, QC and Mr Jonathan Brettler (instructed by Stephenson Harwood LLP) for the Claimant

Mr Hodge Malek, QC and Mr Jonathan McDonagh (instructed by Devonshires Solicitors LLP) for the Second and Third Defendants and Interpleader Claimants

Mr Timothy Otty, QC, Mr Harish Salve, SA, Ms Clare Reffin and Mr James Brightwell (instructed by TLT LLP) for the Fourth and Fifth Defendants and Interpleader Claimants

Mr Eason Rajah, QC and Ms Bryony Robinson (instructed by Withers LLP) for the Sixth Defendant and Interpleader Claimant The Seventh Defendant and the Defendant and Stakeholder did not appear and were not represented

Hearing dates: 10, 11, 12, 13, 17, 18, 19, 20 and 21 June 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

CONTENTS

A.

INTRODUCTION

Para 1

(1)

Overview

Para 1

(2)

The parties

Para 15

(3)

The issues

Para 16

(a)

Pakistan's claims to be absolutely entitled to the Fund

Para 16

(b)

The Princes' and India's contentions that the Fund was held on trust

Para 18

(c)

Rahimtoola

Para 23

(d)

The restitution claim

Para 24

(e)

Pakistan's “public international law” defences

Para 27

(4)

The structure of this Judgment

Para 28

B.

THE EVIDENCE

Para 29

(1)

Introduction

Para 29

(2)

Witnesses of fact called to give evidence

Para 35

(a)

Prince Muffakham

Para 35

(b)

Shaharyar

Para 37

(3)

Witness evidence given under Civil Evidence Act Notices

Para 40

(4)

Documentary evidence

Para 43

(a)

Disclosed documents

Para 43

(b)

Public documents

Para 51

(c)

The source of documents

Para 55

(5)

Expert evidence

Para 56

(6)

The factual narratives

Para 59

(7)

My approach to the evidence

Para 60

C.

HYDERABAD

Para 62

(1)

Partition: India, Pakistan and Hyderabad

Para 62

(2)

The position of Hyderabad in 1948

Para 68

(a)

Geography and religion

Para 68

(b)

Approach of the United Kingdom

Para 69

(c)

Approach of Nizam VII

Para 71

(d)

The approach of India, as viewed by Nizam VII

Para 73

(3)

Operation Polo

Para 74

(4)

Accession of Hyderabad to India

Para 83

D.

THE PAYMENT INTO THE RAHIMTOOLA ACCOUNT

Para 86

(1)

Establishment of the Hyderabad Government Account

Para 86

(2)

Establishment of the Second Account

Para 96

(3)

Transfer of the balance of the Hyderabad State Bank Account to the Second Account

Para 100

(4)

Special treatment of the Second Account

Para 103

(5)

The Rahimtoola Account

Para 105

(a)

Approach

Para 105

(b)

The evidence

Para 106

(i)

Communications dated 14 September 1948

Para 106

(ii)

Communications dated 15 September 1948

Para 108

(iii)

Rahimtoola's evidence

Para 111

(iv)

Communications dated 16 September 1948

Para 113

(v)

Events of 20 September 1948

Para 115

(vi)

The Bank's views regarding the basis upon which the account was held

Para 118

(c)

Findings

Para 121

(i)

Introduction

Para 121

(ii)

The evidence of Rahimtoola

Para 124

(iii)

The 15 September letters

Para 126

(iv)

My conclusions on the evidence

Para 130

(6)

Attempts to freeze the accounts

Para 135

E.

EVENTS POST-DATING THE TRANSFER

Para 147

(1)

Introduction

(2)

Appointment of a new High Commissioner for Pakistan

Para 148

(3)

The Ispahani letter

Para 150

(4)

The 1954 Proceedings

Para 153

(5)

The 1956 Assignment

Para 164

(6)

Subsequent dealings

Para 167

(a)

The Princes

Para 169

(b)

India

Para 173

(c)

Other interests

Para 174

F.

THE ACTUAL AUTHORITY OF NIZAM VII AT THE TIME OF THE TRANSFER

Para 176

(1)

Introduction: why the issue matters

Para 176

(2)

Applicable law

Para 181

(3)

Is the law of Hyderabad law that is recognised in the English courts?

Para 185

(a)

The problem stated

Para 185

(b)

The status of Hyderabad from 15 August 1947 until the conclusion of Operation Polo

Para 188

(c)

The status of Hyderabad after Operation Polo

Para 193

(4)

What is the law of Hyderabad on this point?

Para 197

(5)

The authority of Moin as a Hyderabad Government official

Para 199

G.

ABSOLUTE TRANSFER OF THE FUND: THE ARMS FOR MONEY ARGUMENT

Para 202

(1)

Introduction

Para 202

(2)

The provision of weapons in Pakistan and Hyderabad

Para 205

(3)

Evidence of Hyderabad's involvement in the provision of weapons

Para 210

(4)

Connection between the Transfer and the provision of weapons

Para 215

(5)

Conclusion

Para 216

H.

ABSOLUTE TRANSFER OF THE FUND: THE SAFEGUARDING ARGUMENT

Para 217

(1)

Introduction

Para 217

(2)

The facts

Para 220

(a)

Approach

Para 220

(b)

Authorisation by Nizam VII

Para 221

(c)

Moin's intention

Para 231

(i)

Introduction

Para 231

(ii)

Issue estoppel

Para 233

(iii)

The transfer

Para 239

(d)

Rahimtoola's intention

Para 241

(3)

The law

Para 243

(a)

Introduction

Para 243

(b)

Express trust

Para 244

(i)

The three certainties

Para 244

(ii)

Agency

Para 246

(c)

Constructive trust

Para 248

(i)

The law

Para 248

(ii)

Constructive trust “of the first kind” generally

Para 250

(iii)

A trustee de son tort

Para 251

(d)

Resulting trust

Para 252

(4)

The question of “choice” as to trustee and the Ispahani letter

Para 255

(5)

An absolute interest in Pakistan

Para 258

(6)

Conclusions

Para 259

I.

NO TRUST IN ANY EVENT

Para 260

(1)

Introduction

Para 260

(2)

No trust relationship can arise as a matter of private law

Para 262

(3)

A court should exercise caution when considering whether a trust arises in the case of sovereign states

Para 266

J.

THE RESTITUTION CLAIM

Para 271

(1)

Introduction

Para 271

(2)

Pakistan's raising of the procedural bar of sovereign immunity prevented time running against any claimants to the Fund, which only began to run when the procedural bar was waived

Para 276

(3)

Abuse of process in raising the limitation defence

Para 280

(4)

Claim against the Bank

Para 286

K.

FOREIGN ACT OF STATE DOCTRINE AND NON-JUSTICIABILITY

Para 292

(1)

The nature of the Doctrine

Para 292

(2)

Aspects of the Doctrine relied upon by Pakistan

Para 295

(3)

Justiciability

Para 301

(a)

The ambit of Pakistan's case

Para 301

(b)

Partial non-justiciability

Para 303

(c)

Non-justiciability: Rule 3 expanded

Para 306

(i)

The ambit of Rule 3

Para 306

(ii)

The public policy exception

Para 307

(iii)

Synthesis

Para 309

(4)

Application in the present case

Para 313

L.

ILLEGALITY

Para 315

(1)

Introduction

Para 315

(2)

Is illegality “analytically irrelevant”?

Para 319

(3)

The significance of the settlement

Para 324

(4)

Different types of illegality alleged by Pakistan

Para 327

(a)

Introduction

Para 327

(b)

The Indian Independence Act 1947

Para 330

(c)

The Standstill Agreement

Para 332

(d)

The Charter of the United Nations

Para 334

(5)

Overall conclusion

Para 339

M.

CONCLUSIONS AND DISPOSITION

Para 340

ANNEXES

Annex 1

GLOSSARY OF NAMES AND TERMS USED IN THE JUDGMENT

Para 1 fn 1

Annex 2

MAP SHOWING THE POSITION OF HYDERABAD IN 1948

Para 68

Annex 3

TRANSACTIONS ON THE HYDERABAD STATE BANK ACCOUNT, THE SECOND ACCOUNT AND THE RAHIMTOOLA ACCOUNT

Para 91

TABLES

Table 1: Witness evidence given under Civil Evidence Act Notices

Para 40

Table 2: Documents put in under Civil Evidence Act Notices

Para 46

Mr Justice Marcus Smith

A. INTRODUCTION

(1) Overview

1

. On 20 September 1948, Nawab Moin Nawaz Jung ( Moin) 1 caused the sum of £1,007,940 9s 0d to be transferred from an account of the Government of Hyderabad held at Westminster Bank (the Bank 2) to an account in the name of Habib Ibrahim Rahimtoola ( Rahimtoola), also at the Bank. I shall refer to this transaction as the Transfer. Until 17 September 1948, Moin had been Finance Minister and Minister for...

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