Nirav Modi Ordered to Pay Over Rs 100 Crore to Bank of India as London Court Delivers Major Victory in Fraud Fallout Case

Nirav Modi Ordered to Pay Over Rs 100 Crore to Bank of India as London Court Delivers Major Victory in Fraud Fallout Case​

A significant verdict has been delivered by the London High Court in a complex loan recovery case against fugitive diamantaire Nirav Modi. The court held him personally liable to pay over $10.7 million (over ₹100 crore) under a personal guarantee furnished for a loan extended to his Dubai-based company, Firestar Diamond FZE.

The judgment, delivered by Justice Simon Tinkler in the London Circuit Commercial Court, represents a strong legal setback for Modi amidst ongoing extradition battles. The ruling confirmed that the Bank of India was entitled to recover the outstanding amount despite challenges raised by Modi.

Verdict Upholds Bank of India's Claim Against Fugitive Businessman​

The dispute traces back to a loan granted by the Bank of India to Firestar Diamond FZE in July 2012. Modi had executed a personal guarantee in August 2013, assuring repayment obligations should default occur.

Justice Tinkler ruled that Modi is liable under the personal guarantee for the principal amount due of $4.1 million. The court stated that interest calculated on the basis set out by the bank must also be added to the recovery sum.

The judge noted that Mr Modi failed to provide any defense explaining why the Bank was not entitled to the debt repayment. This judgment strengthens the lender's efforts as it pursues dues from the businessman in the UK.

The Fallout of PNB Fraud Drives Loan Recall Dispute​

A key element before the court was whether the alleged Punjab National Bank (PNB) fraud and its consequences constituted a material adverse effect justifying the bank to recall the loan facility. Justice Tinkler concluded that the circumstances clearly justified the lender's action in initiating recovery proceedings.

The dispute arose after the allegations of the multi-crore PNB fraud surfaced, leading the Bank of India to move to recall the loan in early 2018. Repayment demands were subsequently issued to Firestar Diamond FZE and Modi in March and April 2018, which went unanswered.

The court relied heavily on evidence suggesting that the company was materially affected by the wider fraud. The judge observed that from mid-February 2018, it was reasonable to infer that the borrower and every company in the Firestar Group were likely to be negatively impacted.

Legal Findings Reject Modi's Defenses Over Notices and Termination​

Modi had contested the bank's claim, arguing among other points that the personal guarantee was unenforceable. He also claimed he had not received valid repayment notices from the Bank of India in 2018 or 2025 because he was not residing in India at the time.

These arguments were rejected by Justice Tinkler, who found sufficient evidence demonstrating that both demand notices had been successfully served to him. The court noted that the 2025 demand notice was specifically sent to HMP Thameside, the prison where Modi is detained.

The court also took into consideration Modi's own correspondence with the bank from February 17, 2018. In that email, he acknowledged a media frenzy resulting in search and seizure of operations, which effectively caused Firestar International Pvt Ltd and Firestar Diamond International Pvt Ltd to cease functioning.