Fugitive diamond businessman Nirav Modi has suffered another major setback in the United Kingdom after a London court ordered him to pay more than USD 10.7 million (over ₹100 crore) to Bank of India in a loan recovery case linked to his Dubai-based business entity.
The ruling, delivered by the London Circuit Commercial Court, comes as part of an ongoing dispute involving a loan issued to Firestar Diamond FZE, a company under Modi’s Firestar Group network.
The court held that Modi is personally liable for the repayment under a personal guarantee he had signed in 2012, making him responsible even after the borrowing company defaulted.
Court Confirms Personal Liability Under Guarantee
According to the judgment, Nirav Modi had executed a legally binding personal guarantee in favour of Bank of India, agreeing to repay the loan if the company failed to meet its obligations.
The court ruled that this guarantee remained valid and enforceable, even after the financial collapse of the borrower entity.
The total liability includes around USD 4.1 million principal amount (approximately ₹38.9 crore) along with accumulated interest, pushing the recoverable dues beyond USD 10.7 million.
Loan Origin Dates Back to 2012
The dispute originates from a loan facility sanctioned in 2012, well before the Punjab National Bank (PNB) fraud allegations surfaced.
On August 3, 2012, Modi signed the personal guarantee, which later became central to the bank’s recovery case after the borrower defaulted.
Investigators and court documents indicated that the financial condition of Firestar Group deteriorated sharply after early 2018, when investigations into large-scale banking fraud began gaining momentum in India.
CBI Probe and Financial Collapse Context
In February 2018, the Central Bureau of Investigation (CBI) filed the first FIR in connection with the PNB scam, which later became one of India’s largest banking fraud cases, allegedly involving nearly USD 2 billion in irregular transactions.
Following the exposure of the case, multiple Firestar-linked companies reportedly faced financial stress, leading to loan defaults across jurisdictions.
Bank of India Initiates Recovery Action
After the default by Firestar Diamond FZE, Bank of India launched independent recovery proceedings against Nirav Modi based on the personal guarantee.
The bank issued several repayment notices, but claimed no dues were cleared despite repeated demands.
Modi’s legal team challenged the enforcement, arguing that the guarantee could not be triggered and that proper demand procedures were not followed.
Court Rejects Defence Arguments
Modi’s lawyers also argued that he did not receive certain repayment notices issued in 2018 and 2025, claiming he was outside India at the time.
However, the court dismissed these claims, noting that the notices were properly served and that key documents had already reached his legal representatives earlier.
The judgment also stated that one of the notices was delivered to the UK prison where Modi is currently held.
Email Evidence and Financial Acknowledgement
The court further relied on evidence indicating that Modi himself had acknowledged financial distress within the group through email communications, stating that adverse publicity had significantly damaged business operations.
Judges observed that by early 2018, it was already clear that the group’s financial position had weakened substantially, making repayment obligations enforceable.
Another Setback Amid Extradition Battle
This ruling adds to a series of legal setbacks for Nirav Modi in the UK, where he continues to fight extradition proceedings to India.
Earlier attempts to reopen his extradition challenge were rejected by UK courts, while Indian authorities continue to pursue his return in connection with the alleged multi-billion-dollar PNB fraud case.
Modi remains in custody in the UK as he explores further legal remedies, including proceedings before the European Court of Human Rights, in an effort to avoid extradition.
