A London court has ruled that £35 million held in a UK bank account must go to the descendants of an Indian royal, and not to Pakistan.
The High Court of England and Wales upheld the claims of India and two descendants of the late 7th Nizam of Hyderabad in the 70 years old fund that is being held by the National Westminster Bank in London.
The Fund had been held in the account of the High Commissioner of Pakistan to the UK Rahimtoola since September 1948 when the dispute began after the last Nizam (king) of Hyderabad deposited £1m in the UK account, held by the then Pakistan high commissioner. With interest, the sum has grown to £35m, reports BBC.
Pakistan had claimed that the money was a payment for arms supplied to the Hyderabad state during India's annexation in 1948.
The judge ruled there was no evidence to back Pakistan's claims to the money.
The origins of the dispute go back to the 1947 partitioning of British India.
Hyderabad, which was a princely state, was annexed by India in 1948 in a military operation - the cash transfer had been made shortly before that.
The Nizam, Mir Osman Ali Khan, had not been able to decide whether his state should be in Pakistan or India.
His descendants alleged that he had asked for the money to be returned weeks after the annexation by India took place, but then Pakistan refused to give it back.
The court case had been fought by his family together with the Indian state.
National Westminster Bank, in which the money had been deposited, refused to release the funds to either party until the case was resolved by the courts.
In 2013, Pakistan commenced fresh proceedings, thereby waiving state immunity. A subsequent attempt by Pakistan to discontinue the proceedings was rejected as an abuse of process by the UK Court.
The interest on the original deposit saw the money grow to £35m by 2019.
Pakistan argued it had been given the money in order to procure arms but the court determined it had the right to rule in the case, given that the money had been deposited in a British bank account.
The judge said: "Although the Government of Hyderabad was involved in the purchase of weapons in order to resist what Nizam VII saw as attempts by India forcibly to annex Hyderabad, and although the Second Account was used to pay for some of these weapons, I do not consider that the transfer had anything to do with the purchase of weapons or the compensation of Pakistan (in any way) for the purchase of weapons".
"The court today made it clear that it did not think the money was handed to Pakistan outright. There is overwhelming evidence that Pakistan only held the money as a trustee and it actually belonged to the Nizam," Paul Hewitt, the lawyer for one of the grandsons, told the BBC's Gaggan Sabherwal.
Hewitt said the case, which had begun when his client was a child, was finally being resolved when he was in his 80s.
"We welcome the judgment of Justice Marcus Smith," Najaf Ali Khan, one of the Nizam's grandsons, told BBC Telugu.
"The High Court has rightly rejected Pakistan's claim. The family has long awaited this judgement."
India's foreign ministry also welcomed the verdict in a press statement.
Pakistan could seek to appeal, but otherwise the money will be given to the Nizam's grandsons and the state of India.