The London High Court ruled that the fugitive businessman is personally liable for more than $10.7 million linked to a loan extended to a Firestar Group company
In a significant legal victory for Bank of India, a London High Court has ordered fugitive diamond trader Nirav Modi to pay more than $10.7 million (over Rs 100 crore) under a personal guarantee linked to a loan provided to one of his group companies.
The ruling was delivered by Justice Simon Tinkler in the London Circuit Commercial Court on Tuesday. Modi is currently lodged in a London prison and is contesting his extradition to India in connection with the multi-crore Punjab National Bank (PNB) fraud case.
Court upholds personal guarantee
The dispute stems from a loan granted by Bank of India in 2012 to Firestar Diamond FZE, a Dubai-based company associated with the Firestar Group. In 2013, Nirav Modi signed a personal guarantee agreeing to repay the loan if the company defaulted.
After the alleged PNB fraud surfaced in 2018, the bank recalled the loan and sought repayment from both the company and Modi. According to court records, the demands were not met.
Justice Tinkler held that Modi was liable under the guarantee and ordered him to pay the principal amount of $4.1 million (approximately Rs 38.9 crore) along with accrued interest.
“Mr Modi is liable under the personal guarantee to the bank for the principal amount due,” the court observed, adding that Modi had failed to provide any valid defence against the bank’s claim.
Defence arguments rejected
During the proceedings, Modi argued that the guarantee could not be enforced and claimed he had not received valid repayment notices from the bank.
However, the court rejected these submissions and ruled that the notices had been properly served. The judgment noted that one notice was sent to the London prison where Modi is currently detained, while another had been communicated through his legal representatives.
The court concluded that Bank of India was entitled to recover the outstanding dues under the terms of the personal guarantee.
Impact of PNB fraud highlighted
The judgment also referred to the financial fallout following the exposure of the alleged PNB fraud in 2018.
Justice Tinkler observed that the controversy had significantly affected the financial position of Firestar Group companies, increasing the risks faced by lenders. The court cited an email sent by Modi in February 2018 in which he acknowledged that the developments had adversely impacted the group’s ability to meet its obligations.
Recovery efforts continue
The ruling marks another important step in Indian banks’ efforts to recover funds linked to the alleged PNB scam, one of the country’s largest banking fraud cases.
With the court upholding the validity of the personal guarantee, Bank of India is now entitled to recover the the principal amount as well as applicable interest from Modi.
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