The London Circuit Commercial Court on Tuesday ruled in favor of the Bank of India, ordering fugitive billionaire Nirav Modi to pay more than USD 10.7 million (approximately Rs 100 crore) in a loan recovery case. The court determined that Modi was personally liable under a personal guarantee he signed for a loan extended to Firestar Diamond FZE, a Dubai-based company within the Firestar Group.
Details of the Loan and Guarantee
The dispute originates from a lending facility approved by the Bank of India in 2012, before the emergence of the massive Punjab National Bank (PNB) fraud case. On August 3, 2012, Modi executed a personal guarantee in favor of the bank, pledging to repay the loan if the borrower defaulted. Firestar Diamond FZE subsequently failed to meet its repayment obligations, prompting the bank to initiate recovery proceedings.
The total recoverable amount includes a principal outstanding of over USD 4.1 million (about Rs 38.9 crore) plus applicable interest. The court ruled that despite the borrower's default, Modi remained legally bound by his guarantee.
Court's Rejection of Modi's Arguments
Nirav Modi challenged the enforcement of the personal guarantee before the London court. His legal team argued that the Bank of India lacked sufficient justification to accelerate the loan and pursue fast recovery, and that no legitimate repayment demand had been issued. They also contended that Modi did not receive demand letters sent in April 2018 and October 2025 because he was not in India during those periods.
The court rejected these arguments, determining that the notices had been duly served. According to the ruling, the Firestar Group's financial situation deteriorated sharply after the discovery of the alleged banking fraud in early 2018. The Central Bureau of Investigation (CBI) filed its first FIR in the PNB fraud case in February 2018, with investigators claiming that transactions totaling about USD 2 billion were implicated.
Impact and Context
This judgment marks another major legal setback for Nirav Modi in the UK. He is also a prime accused in the Rs 13,000 crore PNB scam, one of India's largest banking frauds. The Bank of India had repeatedly sent demand notices seeking payment of unpaid balances, but received no response. The court's decision enforces Modi's personal liability under the guarantee, allowing the bank to recover the outstanding amount.
