ISLAMABAD/London - A 68-year legal stalemate between Pakistan and India over £35 million locked away in a British bank account could be edging towards a conclusion.

On Tuesday, British judge Mr Justice Henderson paved the way for a full trial of the dispute to take place at London's High Court. After a preliminary hearing, the judge ruled that Pakistan and India both have arguable claims to the cash, worthy of a full hearing, reported Daily Mail.

Pakistan sees the ruling as a victory against India in the Hyderabad fund case. The Foreign Ministry said the case catered to the release of funds worth one million pounds by Nizam Mir Osman Ali Khan, Asaf Jah VII, the last Nizam of the state of Hyderabad, to the newly formed state of Pakistan.

Hyderabad was a princely state located in the south-central region of India, and was ruled, from 1724 until 1948, by a hereditary Nizam. The capital city was Hyderabad.

The Asaf Jah dynasty was of Turkic origin from the region around Samarkand in modern-day Uzbekistan. They came to India in the late 17th century and became employees of the Mughal Empire.

In 1798, Hyderabad became a princely state under the British East India Company’s suzerainty. By a subsidiary alliance it had ceded to the British East India Company the control of its external affairs. In 1903, the Berar region of the state was separated and merged with the central provinces of British India to form the central provinces and Berar.

In 1947, at the time of the partition of India, Britain offered various princely states in the subcontinent the option of acceding to either Pakistan or India or staying on as an independent state. Nizam decided to keep Hyderabad independent. The leaders of the new Union of India were, however, wary of having an independent—and possibly hostile – state in the heart of their new country. Most of the other 565 princely states had already acceded to Pakistan or India voluntarily.

In September 1948, India launched a military operation, named Operation Polo, led by Sardar Vallabhbhai Patel, then minister of home affairs and deputy prime minister of India. The Indian armed forces invaded the Hyderabad state and overthrew Nizam.

The Foreign Office yesterday said the English High Court made the decision of the case in Pakistan’s favour in the 75-page judgement in the Hyderabad fund case, which also hinted towards the effectiveness of the strategy adopted regarding the dealing of the case by the Pakistani legal team. The value of the money had increased from an initial amount of a million pounds, named in 1948, to 35 million pounds during the current times.

India adopted the stance that Pakistan’s claim to the 35 million pounds presented in a bank account and named to the Pakistani High Commission since September 20, 1948, was not valid, but the judge believed there was quite some evidence that supported Pakistan’s claim to the money entitled by the Nizam of Hyderabad. The judge made the decision in Pakistan’s favour whilst noting that the circumstances in 1947-48 were tense and that attempts were made by India to curb supply of food and medicine to the state of Hyderabad in order to persuade the Nizam to join India.

The case shall now proceed to full trial unless settled between both neighbouring countries. The Foreign Office said Pakistan offered to mediate in July 2015 in front of retired law lords, but India refused the offer, claiming Pakistan’s stance was not valid.

The Foreign Office noted Pakistan intended to resolve all disputes through negotiations, adding if the particular case is not settled, the country is utmost confident that its legal team shall prevail.

UK COURT DISMISSED PAK APPLICATION, claims INDIA

Issuing clarification on the judgment by a UK court in the Hyderabad fund case, the Indian Ministry of External Affairs on Tuesday said the English court has dismissed Pakistan's application invoking limitation against India's claim to the monies.

The MEA, in an official statement in New Delhi, said it is premature to reach any conclusion regarding ownership of funds, as the matter was sub-judice.

According to reports, India had challenged the 35 million pounds in a bank account in the name of the High Commissioner of Pakistan since 20th September 1948, which was transferred by Nizam of Hyderabad before acceding to India.

"In the pre-trial judgment, an English court has dismissed Pakistan's application invoking limitation against India's claim to the monies. The judgment states that Pakistan's application for summary disposal of the claim in her favour must fail. The costs for the failure of this application of Pakistan will be awarded to India," the statement said.

"The legal action in the matter, currently sub-judice, was initiated by Pakistan in 2013. Pakistan's subsequent application for discontinuance of the case was rejected by the same court in 2015," it added.

MEA said India was also awarded substantial costs against Pakistan at that stage.

"Pending trial or settlement of the matter, it is premature to reach any conclusion regarding ownership of the monies, especially as the present judgment readily acknowledges that there is much force in many of India's arguments to strike out Pakistan's claim of ownership," MEA said.