Accord­ing to K.M. Mun­shi, appoint­ed Indi­an agent gen­er­al in Hyder­abad, the Indi­ans felt that the con­clu­sion of a sta­tus quo agree­ment with Hyder­abad meant that India had lost con­trol of Hyderabad‘s affairs. The Hyder­abad State Con­gress opposed it because it was seen by the Indi­an gov­ern­ment as a sign of weak­ness. [16] V. P. Menon said Nizam and his advis­ers saw the deal as a respite in which Indi­an troops would be with­drawn and the state could build its posi­tion to main­tain inde­pen­dence. [17] Dur­ing the stand­still peri­od, a new agree­ment is nego­ti­at­ed, which typ­i­cal­ly mod­i­fies the orig­i­nal repay­ment plan of the loan. This is used as an alter­na­tive to bank­rupt­cy or enforce­ment if the bor­row­er can­not repay the loan. The sta­tus quo agree­ment allows the lender to save a cer­tain val­ue from the loan. In case of enforce­ment, the lender can­not receive any­thing. By coop­er­at­ing with the bor­row­er, the lender can improve its chances of recov­er­ing some of the out­stand­ing debt. Hyder­abad vio­lat­ed all the claus­es of the agree­ment: exter­nal­ly, by plot­ting with Pak­istan, to which it secret­ly lent £15 mil­lion; in defense through the con­struc­tion of a large semi-pri­vate army; in com­mu­ni­ca­tion, by dis­rupt­ing bor­der traf­fic and tran­sit traf­fic of Indi­an Rail­ways. [18] India has also been accused of vio­lat­ing the agree­ment by impos­ing an eco­nom­ic blockade.

It turned out that the state of Mum­bai was dis­rupt­ing the sup­ply of Hyder­abad with­out Delhi‘s knowl­edge. The gov­ern­ment has promised to include the file with provin­cial gov­ern­ments, but schol­ar Lucien Beni­chou says this has nev­er hap­pened. India also delayed India‘s arms ship­ments to Hyder­abad, which was lat­er described as a vio­la­tion of the sta­tus quo agree­ment. [19] The agree­ment is par­tic­u­lar­ly impor­tant to the extent that the bid­der had access to the sub­ject entity‘s con­fi­den­tial finan­cial infor­ma­tion. On 15 August, the State of Juna­gadh con­clud­ed the instru­ment of acces­sion and the sta­tus quo agree­ment with Pak­istan. It was adopt­ed by Pak­istan on 13 Sep­tem­ber. [5] Juna­gadh was the only state to declare Pakistan‘s mem­ber­ship until August 15. [6] The new del­e­ga­tion obtained only minor amend­ments to the old draft agreement.

[12] He deter­mined that all the admin­is­tra­tive agree­ments and arrange­ments that exist­ed at the time between the British Crown and Nizam would be main­tained with the Indi­an gov­ern­ment. These include defence, for­eign affairs and com­mu­ni­ca­tion (the three themes nor­mal­ly addressed in the Instru­ment of Acces­sion). Agents would be exchanged between Hyder­abad and India. The Indi­an gov­ern­ment has agreed to relin­quish the func­tions of Para­mount­cy. The stand­still agree­ment is expect­ed to remain in force for a peri­od of one year. [13] The agree­ment was signed by Nizam on Novem­ber 29, 1947. [14] A stand­still agree­ment may also exist between a lender and a bor­row­er if the lender ceas­es to require a sched­uled pay­ment of inter­est or prin­ci­pal for a loan, in order to give the bor­row­er time to restruc­ture its debts.…