New Delhi, Apr 11 : The Union Cabinet today gave its approval to pursue an out-of-court settlement with Pakistan and the heirs of the Nizam on the matter of funds lying with the Nat West Bank.
The cabinet also gave its approval to the negotiating strategy.
This will release funds lying locked up with a British Bank for the last 60 years.he negotiations will be conducted over a period of 18 months.
The origin of the 'Hyderabad Funds Case' goes back to the transfer on September 20, 1948 of an amount of over one million pounds sterling maintained in the name of the Nizam of Hyderabad's Government in National Westminister Bank, London into an account in the name of Habib Ibrahim Rahimtoola, the then High Commissioner for Pakistan in London.
The transfer was on the instructions of the Nizam's Finance Minister, but without the consent of the Nizam's Government.
These instructions were irregular inasmuch as the Finance Minister of the Nizam's Government had no power to withdraw this money without the express sanction of the Nizam or the State Government.
The Nizam's subsequent instructions to retransfer the funds were not complied with.
This was followed by correspondence between the Nizam of Hyderabad and the Bank and subsequent arbitration in the British Courts going up to the House of Lords.
The House of Lords held that the legal title to the money vested in the Government of Pakistan though the latter was not asserting a beneficiary title to the money.