From a shoe to RBI vault: The journey of the cursed Jacob diamond

The Jacob Diamond spent years hidden in a shoe, survived one of the most sensational legal battles of princely India and eventually ended up in the vaults of the Reserve Bank of India. Weighing 184.75 carats, it is one of the largest polished diamonds in the world and significantly larger than the Kohinoor. Yet its fame comes less from its size and more from the strange trail of intrigue, vanity, litigation and superstition that followed it for more than a century. In Hyderabad, it acquired the reputation of a *manhoos hira* or unlucky diamond. The story begins not in a treasury but in the extravagant world of the Nizams and a jeweller whose name would become permanently attached to the gem.

A giant stone looking for a royal buyer

The Jacob Diamond is believed to have originated from the famous diamond-producing regions associated with Golconda, though some accounts of its commercial journey link it to the international diamond trade of the late nineteenth century. Before cutting and polishing, the rough stone is thought to have weighed more than 400 carats. Once fashioned into its present rectangular cushion-cut form with 58 facets, it measured nearly 40 millimetres in length and weighed 184.75 carats.


ASLO READ | Code Name Silver: The Indian spy who played 5 sides in World War II

By the late 1880s and early 1890s, the diamond came into the hands of Alexander Malcolm Jacob, a colourful and controversial jeweller based in Shimla. Jacob was one of the most well-known dealers in gems and antiques in British India. Rumours surrounded him wherever he went. Some regarded him as a genius merchant while others considered him a conman. His reputation was so unusual that he later inspired the character Lurgan Sahib in Rudyard Kipling's novel *Kim*. John Zubrzycki, an Australian author and researcher, has written a meticulously researched account of Jacob’s fascinating life in his book 'The Mysterious Mr Jacob: Diamond Merchant, Magician and Spy'.

Jacob believed he had found the perfect customer in Mir Mahboob Ali Khan, the sixth Nizam of Hyderabad. The Nizam was renowned for his appetite for luxury and jewellery. Access to him was often controlled by his influential valet and chamberlain, Albert Abid, who became a crucial figure in the diamond saga.

ALSO READ | When the British built a 4,000-km wall across India to extort tax

The deal that went spectacularly wrong

In 1891, Jacob attempted what would have been the biggest transaction of his career. Through Abid, he negotiated the sale of the enormous diamond to the Nizam. Different accounts vary on the exact figures discussed, but the broad outline is clear. A substantial advance, generally cited as Rs 23 lakh, was deposited to facilitate the transaction while the final price was expected to be much higher.

The dramatic moment arrived when Jacob finally presented the stone before the Nizam at Hyderabad. According to contemporary accounts, the diamond was displayed on a silver tray lined with red velvet. Mahboob Ali Khan examined it and reportedly uttered the words "Na Passand" or "not approved". Whether he genuinely rejected it or whether there was a misunderstanding remains disputed even today. Jacob insisted the Nizam intended to proceed with the purchase. The Nizam demanded the return of his money. Neither side backed down.

What followed was a legal and political storm. The dispute reached British courts and attracted attention across India and beyond. For Hyderabad's ruler, being drawn into such proceedings was itself humiliating. A special commission was involved in recording the Nizam's testimony. Newspapers closely followed the case. Jacob eventually escaped fraud charges but the episode damaged his finances and reputation. The relationship between merchant and customer was destroyed beyond repair.

Ironically, the diamond ended up with the Nizam anyway. Court proceedings and financial settlements eventually left Mahboob Ali Khan in possession of the stone for roughly the amount he had originally deposited. Yet by then he no longer wanted anything to do with it. The diamond had become a symbol of embarrassment rather than prestige.

How a fortune ended up inside a shoe

The legal battle transformed the Jacob Diamond into an object of superstition within the Hyderabad court. Mahboob Ali Khan came to regard it as unlucky. Instead of displaying it among his treasures, he wrapped it in cloth and hid it away. One version says it was wrapped in a cleaning rag. Another says it was tucked into an old shoe and pushed into a drawer. What is certain is that one of the world's largest diamonds vanished from public view.

The story took an even stranger turn after the Nizam's death in 1911. His son and successor, Mir Osman Ali Khan, discovered the forgotten gem while going through his father's belongings. According to the most widely repeated account, the diamond was found in the toe of a shoe at Chowmahalla Palace. The discovery was astonishing. A gemstone worth a fortune had been lying neglected among ordinary personal effects.

The world's most expensive paperweight

If the rediscovery of the diamond sounds dramatic, what happened next sounds almost unbelievable. Mir Osman Ali Khan, who would later be described as one of the richest men in the world, did not rush to place the diamond in a crown or ceremonial necklace. Instead, he reportedly used it as a paperweight on his desk.

The act reflected more than eccentricity. The Jacob Diamond carried the memory of a scandal that had embarrassed the ruling family. The seventh Nizam seems to have viewed it with indifference rather than admiration. For years, one of the largest polished diamonds on earth performed the mundane task of holding papers in place. The image became central to the diamond's legend and helped distinguish it from famous gems whose histories are filled with wars and royal ceremonies.

Independence, inheritance and a long legal fight

After Hyderabad's integration into India and the decline of princely power, the Jacob Diamond became part of the larger collection known as the Jewels of the Nizams. Over time, questions emerged over ownership and disposal of the collection. Members of the Nizam's trusts explored the possibility of selling the jewels internationally. The Government of India opposed such moves, arguing that the collection represented an irreplaceable part of the country's heritage.

The dispute stretched on for years. Courtrooms once again became part of the Jacob Diamond's story. This time the battle was not between a jeweller and a prince but between private claimants and the Indian state. Ultimately, the government succeeded in preventing the jewels from leaving the country. In 1995, it acquired the Nizam's jewellery collection, including the Jacob Diamond, in a landmark purchase.

The RBI vault and rare public appearances

Today, the Jacob Diamond is kept in the Reserve Bank of India's vaults in Mumbai. Unlike the Kohinoor, which remains at the centre of international political debates, the Jacob Diamond spends most of its existence away from public view. Its security arrangements and restricted access have only added to its mystique.

On rare occasions, however, the diamond has emerged from the vault. Exhibitions of the Nizam's jewellery in Hyderabad and other cities drew huge crowds. Visitors were often struck by a simple fact: the stone hidden in a shoe and used as a paperweight was larger than many diamonds better known to the public. At these exhibitions, the Jacob Diamond invariably became the centrepiece of attention.

Why the Jacob Diamond still fascinates

Many legendary diamonds are associated with conquest, bloodshed or imperial politics. The Jacob Diamond's appeal lies elsewhere. Its history revolves around human eccentricities. A dealer overplayed his hand. A ruler became trapped in a public dispute. A priceless gem acquired a reputation for bad luck. Another ruler found it in a shoe and treated it like office stationery.

That sequence of events explains why the Jacob Diamond remains one of India's most compelling treasures. It is not merely a spectacular gemstone. It is a reminder that objects of immense value can sometimes travel the most improbable route. Few jewels have journeyed from a courtroom scandal to a palace shoe and finally to the RBI vault, carrying a century of stories along the way.