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What has a U.K. High Court ruled in the £35-million case? Why did it take so long to be resolved? How is Pakistan involved?

Prime Minister Jawaharlal Nehru (left)with the VII Nizam of Hyderabad, at King Kothi Palace in Hyderabad on December 25, 1948.THE HINDU PHOTO ARCHIVES HYDERABAD

From The Hindu, issue dated Thursday, October 7, 1948, Page 5, “Nizam’s funds in London; Unauthorised transfer; Legal action to be taken”.

The story so far: One of the world’s longest-running legal battles ended on October 2, 2019, with a British judge ruling that the VII Nizam of Hyderabad’s descendants and India can collect £35 million from London’s National Westminster Bank. Justice Marcus Smith of the High Court of England and Wales ruled that the £1 million (now calculated at £35 million or about ₹306 crore) deposited in the London bank rightfully belonged to the Nizam’s family and India and threw out the claim made by Pakistan through its High Commissioner in London.

How did the Nizam’s wealth end up in a London account?

In the days leading up to India’s Independence, the VII Nizam of Hyderabad, Osman Ali Khan, refused to join the Indian Union. He was among the richest princes in India and hired the services of Sir Walter Monckton. Monckton negotiated a Standstill Agreement for the Nizam with the Government of India. As his lawyers moved between Hyderabad, Delhi and Karachi, the Nizam issued a farman (proclamation) for purchase of equipment abroad with funds parked in two bank accounts in London. By equipment, he meant weapons to safeguard the landlocked state. The money in the Imperial Bank of India was transferred to a Hyderabad Government account in other banks. One of these accounts had £1,007,940.45.

Who transferred the money?

The sum of £1,007,940.45 was controlled by the Nizam’s envoy and Foreign Minister, Moin Nawaz Jung. On September 16, 1948, Moin Nawaz called on the Pakistan High Commissioner at his Hampstead residence and asked him to accept the funds. Pakistan’s then Foreign Minister Muhammad Zafrullah Khan was present at the meeting. The transfer of the fund to then Pakistan High Commissioner Habib Ibrahim Rahimtoola’s account happened on September 20, 1948.

In this case, Pakistan relied on this meeting; and the judge leaned on the exchange of letters a day prior to the meeting. On September 15, 1948, Moin wrote to Rahimtoola: “In view of the situation that is now developing in Hyderabad and in order to safeguard the interests of the State, I would be very grateful if you would kindly agree to permit the transfer into your account of just over one million pounds sterling that is now lying at the credit of the Nizam’s Government in the Westminster Bank, London. This amount may kindly be kept by you in trust.”

Rahimtoola responded on the same date: “Your letter of date. In the circumstances, I agree to your suggestion to keep the amount mentioned by you in my name in trust.”

How did the Nizam become so wealthy?

The Nizam’s Dominion encompassed parts of Karnataka, Maharashtra and Andhra Pradesh besides the core area of present-day Telangana. Out of the whole area, nearly 10,000 square miles of land was classified as Sarf-e-Khas or crown lands. The revenue from these vast land-holdings was for the personal use of the Nizam. It was this source of revenue that led Time magazine to designate Mir Osman Ali Khan as the richest man in the world (for its 1937 cover), with a fortune estimated at nearly $2 billion. During the Second World War, the Nizam donated nearly £6 million to finance the war effort.

According to one account, the Nizam spent nearly £20 million in cash to equip his army to fight the Indian Army using the services of Australian gun runner Sidney Cotton.

Why did the case drag on for over 70 years?

On September 17, 1948, the Nizam’s army surrendered to India ending a 105-hour war. The transfer of money took place on September 20. On September 27, the Nizam wired the Governor-General of India and the Deputy Prime Minister of India seeking transfer of the money back to his account. The bank refused. (See chronology)

Who will get the money?

Najaf Ali Khan, a grandson of the Nizam has said: “We are delighted with the verdict. But we have to watch what Pakistan does as it has four weeks time to go in for an appeal. Only if Pakistan doesn’t appeal at this stage the money will come to us.” The Nizam had 18 sons and 16 daughters. In the present case, the titular Nizam VIII, Mukarram Jah, who lives in Turkey transferred his interest in the fund to Hillview Assets Holdings Limited (Hillview). His brother, Prince Muffakam Jah, who shuttles between India and the U.K., was vital to the case and gave evidence which was relied on by the judge to reach his verdict. The judge also referred to an agreement between the Government of India and the princes about how the monies will be divided. The details of the agreement are not available. While much of the royal relics of the Asaf Jahis who ruled between 1724 till 1948 have disappeared in Hyderabad, it is Mukarram Jah’s former wife, Princess Esra Jah, who has salvaged two palaces (in Hyderabad) that have become show-stoppers. The Falaknuma Palace with its faux Gothic and Roman elements has been restored to allow the well-heeled to have a peek at the expansive lifestyle of kings. The palace includes one of the longest dining tables that can seat 101 persons and a breathtaking view of the old city. The Chowmahalla Palace, where the Nizam VIII was crowned, is open to tourists for a small fee. Mukarram Jah has led a reclusive life spending some years in the Australian outback and later in Turkey indulging in his fancy for machines that range from sleek cars to earthmovers. A few earthmovers can still be seen in the palace at the rear of KBR Park in the western part of Hyderabad. Princess Esra’s dream remains putting on show the Nizam’s Jewels on a permanent basis in Hyderabad. “The gems belong to the city. They should be showcased here,” she had told this reporter, a few months earlier. The gems, worth billions, were showcased at the National Museum in Delhi early this year.

Will a new American law and sanctions come in the way of the S-400 Triumf missile purchase?

The story so far: Exactly a year ago, on October 5, 2018, India and Russia signed a contract to buy the Russian Triumf missile system, concluding negotiations that began in 2015. During that time, however, a new U.S. law, called “Countering America’s Adversaries Through Sanctions Act” or CAATSA was passed by the U.S. Congress, which transformed what should have been a straightforward bilateral deal into a complex trilateral balancing game for India.

How significant is the Russian deal for New Delhi?

A year after Prime Minister Narendra Modi and Russian President Vladimir Putin signed an agreement for the $5.4 billion S-400 Triumf missile system (picture), the deal continues to cast a cloud over India-U.S. ties. Earlier this week, even as External Affairs Minister S. Jaishankar was meeting his American counterpart Mike Pompeo in Washington, a U.S. official reminded India of the “risks” attached to the deal. The State Department spokesperson said on Tuesday, “We urge all of our allies and partners to forgo transactions with Russia that risk triggering sanctions under the Countering America’s Adversaries Through Sanctions Act (CAATSA).” This was shortly after Mr. Jaishankar reiterated at a think-tank event India’s intention to acquire the Russian system. Mr. Jaishankar had said in Washington, “We would not like any state to tell us what to buy or not to buy from Russia any more than we would like any state to tell us to buy or not buy from America,” asserting both India’s traditional ties to Russia, as well as the significance of the S-400 deal in particular.

Why is the S-400 deal important?

The agreement to purchase the Triumf missile system boosted India-Russia defence ties at a point of inflection last year.

Russia has traditionally been India’s biggest defence supplier, but was surpassed by the U.S. in the last few years, a fact that had added to a perceptible drift in bilateral ties. Mr. Putin and Mr. Modi addressed this drift with a special “reset” summit in Sochi last May, which was followed by Mr. Putin’s visit to Delhi on October 5, 2018, when the deal was announced. The Indian Air Force has also backed the superior air defence system in that it will fill the gap in India’s particular needs: countering its main adversaries and neighbours, China and Pakistan’s growing air power, while dealing with a depleting stock of fighter aircraft.

Is India the only country facing CAATSA sanctions?

By coincidence, CAATSA has now been invoked by the United States twice already, and both times for countries buying the Triumf system from Russia. In September 2018, the U.S. State Department and Treasury Department announced sanctions on China’s Equipment Development Department (EDD), the military branch responsible for weapons and equipment, for the procurement of the S-400 Triumf air defence system and Sukhoi S-35 fighter aircraft. The sanctions were triggered when the People’s Liberation Army’s took delivery of the systems. Washington expelled Turkey from the F-35 fighter jet programme in July this year after the first delivery of S-400s was received, and says sanctions are still under consideration unless Turkey reverses its deal with Russia. India is neither like China, which has an inimical relationship with the U.S., and hence not bound by its diktats, nor like Turkey which is a NATO ally of the U.S. and expected to comply with Washington’s demands, and hence hopes to escape CAATSA sanctions.

Is a sanctions waiver possible for India?

Written into the CAATSA language is also an exit clause, which states that “The [US] President may waive the application of [CAATSA] sanctions if the President determines that such a waiver is in the national security interest of the United States.” In August 2018, the U.S. Congress also modified the waiver clause to allow the President to certify that a country is “cooperating with the United States Government on other matters that are critical to United States’ strategic national security interests”. Government officials including Foreign Secretary Vijay Gokhale, National Security Adviser Ajit Doval and Mr. Jaishankar have all expressed the hope that the U.S. will exercise this waiver for the S-400 deal to India for a number of reasons: that a militarily stronger India is in the U.S.’s interests, and that India cannot completely drop its traditional dependence on Russian defence equipment without being weakened. In addition, it is no secret that U.S. President Donald Trump has misgivings about the CAATSA sanctions, which he said were meant to curtail his own powers to deal with Russia, and the other countries included in the act — Iran and North Korea. It is hoped that Mr. Trump will grant India a waiver on the deal, thanks to good bilateral relations with India and the fact that it is a “major defence partner” of the U.S.

What happens if a waiver is not granted?

Section 235 of the CAATSA legislation stipulates 12 kinds of punitive sanctions that the U.S. could place on a country conducting significant transactions in defence, energy, oil pipelines and cybersecurity technology with any of the U.S.’s “adversaries”, and according to the Act, the U.S. President may impose “five or more of the sanctions described”. These measures include export sanctions, cancellation of loans from U.S. and international financial institutions, ban on investments and procurement, restrictions on foreign exchange and banking transactions, and a visa and travel ban on officials associated with any entity carrying out the sanctioned transactions. None of these is expected to go into process until India takes delivery of the five S-400 systems it has paid an advance on, which are expected to begin in about 20 months and conclude by 2023.

Has India given the U.S. a fait accompli on the S-400?

India’s firm-footed response to the U.S. threat of sanctions on the Russian S-400 is in sharp contrast to its decision to “zero out” oil purchases from Iran, which were sanctioned by the U.S. last year, and denotes that while the government is prepared to diversify its energy sources, it will not be bullied on its defence security options. Given the stakes involved, the government hopes that the U.S. will put its burgeoning strategic, defence and business bilateral relationship with India above its rancour with Russia. If not, however, officials say they are prepared to ride out the storm.

Why is the government pushing for the Citizenship (Amendment) Bill? Does it go against Article 14 of the Constitution?

The story so far: The Citizenship (Amendment) Bill, 2016 was passed by the Lok Sabha in January this year but lapsed as it was not tabled in the Rajya Sabha. It had proposed to amend the original Citizenship Act of 1955. After returning to power with a majority for another term, the Bharatiya Janata Party-led National Democratic Alliance government is trying to resurrect the Bill.

What does the Bill mandate?

The Bill had mandated that those who cross the border to India from Afghanistan, Bangladesh and Pakistan and belong to “minority communities”, namely, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians, would not be treated as illegal immigrants despite having entered the country without valid documents or with travel papers that had expired. They would not face deportation under the Passport (Entry into India) Act of 1920 and the Foreigners Act of 1946.

Then Union Home Minister Rajnath Singh, who introduced the Bill in the Lok Sabha, had said these immigrants faced “discrimination and religious persecution”. Mr. Singh said the proposed law would “provide relief to persecuted migrants who have come through western borders of the country to States like Gujarat, Rajasthan, Delhi, Madhya Pradesh and other States.”

The Bill, which was introduced in Parliament on July 15, 2016, explained that many persons of Indian origin including persons belonging to the six “minority communities” had been unsuccessfully applying for citizenship under the Citizenship Act of 1955 but were unable to produce proof of their Indian origin. Hence, they were forced to apply for citizenship by naturalisation which prescribes 12 years’ residency as qualification.

The Bill stated that such a long-drawn process denies illegal immigrants from these six minority communities of the three foreign nations “many opportunities and advantages that may accrue only to the citizens of India, even though they are likely to stay in India permanently”. The amendment shortened the period of residency from 12 to seven years for gaining citizenship by naturalisation. The Bill had also empowered the government to cancel registration as Overseas Citizen of India in case of any violation of the Citizenship Act or any other laws.

Are there faultlines?

The Bill, critics say, violated the basic structure of the Constitution. By distinguishing illegal immigrants on the basis of religion, the proposed law goes against constitutional guarantee of the fundamental right to equality under Article 14 of the Constitution. The protection of Article 14 applies equally to both citizens and foreigners. Second, the Bill would hamper the Assam National Register of Citizens (NRC), which defines all illegal immigrants, irrespective of religion, on the basis of a cut-off date.

The Citizenship Bill is also seen as a move to subvert the Assam Accord of 1985. The Accord deems any person who cannot prove his ancestry beyond March 24, 1971 as an alien. It does not differentiate on the ground of religion in this aspect.

Home Minister Amit Shah has been vocal about reviving the Bill. He has said the government would amend the citizenship norms by re-introducing the Bill before going ahead with a nationwide NRC. The recently concluded NRC exercise in Assam alone has excluded over 19 lakh of the 3.29 crore applicants from the final list.

The Citizenship Bill is seen by many as an effort by the Bharatiya Janata Party to make good its 2014 election manifesto promise — to make India a safe haven for Hindus persecuted in the three foreign nations.

What has the Supreme Court said?

On March 5, 2019, the Supreme Court had sought a response from the Centre on a fresh plea seeking to quash a series of subordinate laws which allows the naturalisation of illegal immigrants who are Hindus, Sikhs, Buddhists, Jains, Parsis and Christians fleeing religious persecution in Bangladesh, Pakistan and Afghanistan. The petitioners have urged the top court to declare the amendments made through the Passport (Entry into India) Amendment Rules, 2015; the Foreigners (Amendment) Order, 2015 and the order issued by the Ministry of Home Affairs on December 26, 2016 under the Citizenship Act, allowing the naturalisation of illegal immigrants who are Hindus, Sikhs, Buddhists, Jains, Parsis and Christians, as “illegal and invalid”.

The petitioners have contended that the leeway offered by the subordinate laws would further multiply the “uncontrolled influx of illegal migrants from Bangladesh to Assam”. Illegal immigration has caused huge demographic changes in the northeastern State, the petitioners have claimed. A Bench comprising Chief Justice of India Ranjan Gogoi and Justice Sanjiv Khanna issued notice on the plea filed by Assam State Jamiat Ulema-e-Hind and had ordered its tagging with a similar pending petition of “Nagarikatwa Aain Songsudhan Birodhi Mancha” (Forum Against Citizenship Act Amendment Bill).

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