A London court has directed fugitive businessman Nirav Modi to pay more than Rs 100 crore to Bank of India, holding him personally liable under a guarantee executed in connection with a loan facility extended to Firestar Diamond FZE, a Dubai-based company belonging to the Firestar Group.
The judgment was delivered by Justice Simon Tinkler of the London Circuit Commercial Court, who ruled in favour of Bank of India in its loan recovery proceedings against Modi. The Court held that the personal guarantee executed by Modi was valid and enforceable, making him responsible for the outstanding dues arising from the borrower’s default.
The dispute originated from a loan facility sanctioned by the Bank of India to Firestar Diamond FZE in July 2012. In August 2012, Modi executed a personal guarantee in favour of the bank, undertaking to repay the debt in the event of default by the borrowing entity.
Following the emergence of allegations relating to the multi-crore Punjab National Bank fraud in early 2018, the financial condition of the Firestar Group deteriorated significantly. In February 2018, the Central Bureau of Investigation (CBI) registered its first FIR concerning the alleged fraud involving companies linked to Modi and his uncle, Mehul Choksi.
Thereafter, Bank of India recalled the loan facility and issued repayment demands to both Firestar Diamond FZE and Modi. According to the bank, despite repeated notices, no repayment was made.
Modi challenged the bank’s claim before the London court, arguing that the personal guarantee could not be enforced. He contended that the bank had failed to issue valid repayment demands and lacked sufficient grounds to accelerate the loan and seek immediate recovery. He also claimed that he had not received the demand notices issued in 2018 and 2025 because he was outside India during the relevant period.
The Court rejected these submissions. Justice Tinkler found that the repayment notices had been properly served and noted that the October 2025 demand notice had also been sent to HMP Thameside in the United Kingdom, where Modi is presently lodged. The Court further recorded that a copy of the April 2018 demand notice had been received by Modi’s legal representatives, demonstrating that he was aware of the bank’s claim and recovery proceedings.
A central issue before the Court was whether the fallout from the alleged Punjab National Bank fraud constituted a material adverse effect under the loan documentation, thereby entitling the bank to recall the facility and invoke the personal guarantee. The Court answered this question in the affirmative.
Justice Tinkler observed that by mid-February 2018, it was reasonable to conclude that Firestar Diamond FZE and other entities within the Firestar Group had been materially and adversely affected by the allegations surrounding the fraud. The Court also relied on an email sent by Modi on February 17, 2018, in which he acknowledged that adverse media coverage had severely impacted the group’s business operations and its ability to meet liabilities owed to financial institutions.
The Court ultimately held that Modi was liable under the personal guarantee for the principal outstanding amount of approximately USD 4.1 million with applicable contractual interest. After adding the accrued interest claimed by the bank, the recoverable amount exceeded USD 10.7 million, equivalent to more than Rs 100 crore.
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