The rigid negative attitude of the Seventh Nizam has refused to take a common stand with the other Indian Princes over the future developments of Greater India and this proved a real hurdle in the path of the British Government to safeguard the rights of the Indian states vis-a-vis the growth of nationalistic and democratic trends in British India.

The British policy or attitude towards the Indian states was declared by the Secretary of State in the House of Commons in 1917. Lord Curzon who had actually drafted the Resolution which was read by the Secretary of State in the House of Commons, attributed the necessity of this step to the allies` espousal of the principle of self determination, which provided further stimulus to India`s nationalistic trends. The vital role was played by the Nizam of Hyderabad and the other Indian Princes in deciding the fate of the allies during the First World War was not only greatly appreciated by His Majesty`s Government, but it was also an eye-opener to the other members of the Imperial Commonwealth and the other component parts of the Empire. Consequently, the states were acclaimed as an entity and as an asset and recognised as a factor in the great movements which had brought success to the Allies. Moreover, as the problems of peace were regarded as no less crucial, the cooperation of the Indian states was also regarded as essential in solving the problems of peace. Hence, the Indian states` international status was confirmed by the inclusion of one of their member, the Maharaja of Bikaner, in the Indian delegation comprising Sir James Meston and Sir Satendra Sinha, which was sent to participate in the Imperial Conference and the Imperial War Cabinet.

Further, the Maharaja of Bikaner as representative of the Indian Princes also attended the Peace Conference of 1919, where he was one of the signatories to the Peace Treaty of Versailles and also participated in the foundation of the League of Nations. Thus, the work which the Maharaja of Bikaner performed for the Empire as the representative of the Indian Princes and the people of India, gave him a place of his own in the forefront of the leading statesmen of the world. Accordingly, the reform of the Government of British India was accompanied by a fresh adjustment of British relations with the Indian states, which provided the Indian states with an international status. But the most important parallel reform, from the point of view of constitutional structure, which the British policy effected towards the Indian states, was the institution of the Chamber of Princes and the reforms which followed as a supplement to the Chamber: for instance, the establishment of the procedure for the examination of treaties and the codification of political practice, the creation of the courts of arbitration and commissions of enquiry, and the maintaining of direct relations between the important states and the Government of India.

It was with a view to safeguarding the British Empire from the ominous threat of stirred Indian Nationalism that made Lord Curzon realise that it was essential for the Raj to maintain the native states. Further, Curzon was quite clear in his mind that so long as the British ruled India, they were the greatest power in the world. Curzon recognised in the princely states a positive source of strength to the Empire, by providing a local focus of loyalty and of organisation for defense in an area too vast to hope for undivided concentration on a single point. Accordingly, with this object in view it was Curzon`s policy to make the states prosperous, strong and efficient, to produce a sense of common interest, so as to convince the native people that the British counsels were not framed with any selfish object, but in all things with an honest desire for the country`s good.

The most notable example of the Princes` response to Curzon`s efforts to establish closer associations with them was that of the Sixth Nizam, Nawab Mir Mahboob Ali Khan. Before Curzon`s Viceroyalty, the Sixth Nizam had for all practical purposes retired from the work of administration, and had no direct contacts with the Government of India, or its representative the British Resident. But under Curzon`s influence, Mahboob Ali Khan once more resumed his duties as the active head of affairs. Moreover, the Sixth Nizam participated willingly along with the other Indian Princes in the ceremonies of the Delhi Darbar of 1903, which was held to celebrate the coronation of Edward VII as King Emperor. Lord Curzon had organized this Darbar not only with a view to bringing the Indian Princes closer to each other, but also with the specific purpose of building up a more organic connection between the Indian states and the Imperial Government.

Each individual state, thus, entered into a separate pact or treaty which governed its relations with the British Government and which was well fitted to preserve the self respect and dignity of each Prince and state. But with the passage of time, there had grown a community of interests among the states upon questions affecting the states as a whole, or questions jointly affecting the states and British India. And although the British Government dealt with states individually, there was likewise a uniformity of policy on the part of the Government in respect of questions which affected the states in common or which jointly affected the states and British India. Moreover, the need for the revision of the Treaties had also become evident, because the conditions had radically changed since the majority of Treaties were made. Therefore, the British Government thought it necessary that they should arrive at an understanding with the states, supplementary to the terms of the treaties, as to the obligations and the rights of the states on the one hand, and those of the British Government on the other, under the changed circumstances. It was, accordingly, with a view to achieving this goal of determining their mutual rights and obligations under the changed circumstances, that the British Government, along with the Institution of the Chamber of Princes, also established the procedure for the examination of treaties and codification of political practice.

The general effects on the Indian Princes collectively and individually of the British Paramountcy and its rights of intervention in the internal affairs of their states, as well as the consequences of such disputes where the Governor General and the Secretary of State were at once a party and a judge, naturally implied that the Princes had to stand by and watch the continuous and progressive encroachment upon their treaty rights, which they were powerless to arrest. Hence, the Princes were conscious of the need for overhauling the practices of the Political Department as far back as the establishment of the Chamber of Princes. The Princes were anxious to find out precisely where they stood and precisely where their rights began and those of the Paramount Powers ended, so that they might be able to take stock of the part which they would be called upon to play in that greater India which they saw shaping before their eyes. It was with the objective that the Maharaja of Bikaner, as Chancellor of the Chamber of Princes, had officially put forward a proposal to Lord Reading in 1922, that His Excellency should call for an informal Round Table Conference of the Princes to discuss with them their relations with the Imperial Government.

The more advanced group of the Indian Princes had realized to the full the fact that, in the India of the future, their position as Rulers of states would depend largely upon how they discharged their responsibilities towards the wellbeing of their states and subjects. Moreover, the Indian Princes were also aware of the fact that the stability of the position of the rulers was essential for the good government of their states. They were confident that, assured of their rights, they would not fail to rise to their responsibilities; that they should look to the interests of their people and that they should constitutionalise their governments, because they knew well that in the India of the future, they of Indian India and British India were to be counted as one in the higher spheres of national life. And they were aware that the proposed scheme of federal structure for the future government of India must be preceded by the establishment of representative government. It was due to the fact that they knew well that groups of autocratically-governed states could find no part in an Indian federal system based on representative institutions.

But at the same time, the Indian Princes did not think that any particular administrative organisation should be laid down to be followed by all the states, because they realized that the standards and types of administration would differ in accordance with the degree of political consciousness awakened in the various states, and in direct proportion to their education and contacts with the political ideals of the West. It was, therefore, thought best that the type and degree of administrative reforms to be introduced in each state should be left to the discretion of each individual Ruler. This policy of making the individual rulers responsible for the degree and types of their own administrative reforms was first announced by Lord Minto in the speech which he made at Udaipur in 1909.

Later the under new Viceroy, Lord Irwin the Indian Princes as an Order, taking courage from the new Viceroy`s favourable disposition towards them, fully backed up the Nizam of Hyderabad`s claim of the right of the Ruler to the internal autonomy of his state as secured to him by his treaties with the Company`s Government. As a result of Paramountcy, the Government of India had the right to intervene in the internal affairs of the states even when the treaty precluded them from doing so. The Princes asserted that this type of encroachment upon their treaties had always been contested by them, whenever the Government of India had advanced it.

To discuss this issue two joint meetings of the Princes and the Ministers were held at Bikaner and Patiala in 1926 and 1927 respectively, which were due as much to the Viceroy Lord Irwin`s own benign attitude, as to His Excellency`s sincere appreciation of the difficulties of the Indian Princes, resulted in the holding of the Round Table Conference which took place at Simla in May 1927 and attended by several Princes.

The British Empire formed the Butler Committee or the Indian States` Committee was empowered to investigate the relationship between the Paramount Power and the Indian States and to make recommendations for the adjustment of financial and economic relations between British India and the Indian States. Thus, the appointment of the Butler Committee to investigate the rights of the internal autonomy of the Indian Princes under British Paramountcy, goes to illustrate the fact that the British Government, along with the furtherance of the cause of self-government for the British Indian Provinces, was equally concerned with keeping intact the internal autonomy of the Indian states.

However, with passing time the position of British Empire in India altered. In the wake of nationalism, the British resorted to a different course of action. During this time the Simon Commission was appointed to review the situation in India. The members of the Simon Commission sincerely believed that this ultimate goal of an All-India polity should be borne in mind while framing India`s future constitution. The practical and theoretical reasons for so planning it would be to facilitate the transition to an All-India structure as soon as the time was ripe for it, although it is equally true that Sir John Simon and his colleagues were fully conscious of the fact that the Indian Rulers in general were naturally proud of their historic position and that their treaty rights had been repeatedly acknowledged by His Majesty`s Government. So, taking a long-range and more cautious view, and treading in the footsteps of their predecessors, Edwin Montagu and Lord Chelmsford, they had come to the same conclusion that the Indian Rulers should be given the choice of using their own discretion for entering into relationship with the rest of India, whenever they thought fit. Moreover, the Simon Commission, with a view to safeguarding the Indian Princes` treaty rights, also subscribed to the extremely important conclusion, that the rights and obligations of British paramountcy over the Indian Rulers should not be assigned without the states` own agreement, to a new Indian Government responsible to an Indian Legislature

Several proposals and schemes for reducing the number of the Indian states were under consideration by the Government of India. The aim was to reach a workable forumla for adjusting the States` relations with the National Government on a basis of parity with the British India provinces, while at the same time safeguarding the autonomy of the Indian states. One such scheme, the grouping of the smaller states under a big Indian state, joined together as a federal unit on a regional basis. In addition, as the British Government was quite in earnest about a Federation inclusive of the Indian states as the ultimate form of Government of future India, its greatest headache was to find a practical solution to secure to the states fair representation in the Federal Legislatures. The present Chamber of Princes did not seem to fit into any federal scheme as an integral part. In the discussions that took place on the subject of states` representation on Federal Legislatures, a development that was suggested as a possibility to the Government of India, was the replacement of the present Chamber, by a series of local Councils of Princes which might greatly facilitate the task of allotting representation in the Federal Legislatures to local groups of states.

Lastly, both in the scheme of `Mediatisation` as well as in the formation of local Councils of Princes, Hyderabad stood a fair chance of leading not only the Deccan states, but the whole of South India. The state of Mysore might have accepted Hyderabad`s leadership, and thus Hyderabad could have played a predominant role in the National Federation of India. But everything boiled down to the introduction of Constitutional reforms in the state. About this the Government of India had been warning the States since the time of Curzon`s words that groups of autocratically governed states would find no part in an Indian federal system based on representative institutions.
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