Fugitive diamond merchant Nirav Modi, currently in a London prison, has suffered a significant legal defeat. The London Circuit Commercial Court has mandated that Modi pay more than USD 10.7 million (over Rs 100 crore) to the Bank of India. This judgment stems from a personal guarantee Modi provided for a loan granted to Firestar Diamond FZE, a Dubai-based entity within his Firestar Group.
In its ruling delivered this past Tuesday, the court determined that Modi is personally liable for the debt. The total liability of USD 10.7 million encompasses:
* Principal Outstanding: Approximately USD 4.1 million.
* Accrued Interest: Calculated in accordance with the bank’s claims.
The dispute dates back to a 2012 loan facility, which was established well before the high-profile Punjab National Bank (PNB) fraud case emerged.
Origins of the Legal Dispute
The conflict traces back to August 3, 2012, when Modi executed a personal guarantee in favor of the Bank of India, agreeing to take personal responsibility for the loan in the event of a default. Following the 2018 outbreak of the PNB fraud investigation—an alleged fraud involving nearly USD 2 billion—the financial stability of the Firestar Group collapsed. When Firestar Diamond FZE defaulted on the loan, the bank initiated recovery proceedings.
Rejected Defense Arguments
Modi’s legal team attempted to contest the proceedings, arguing that the guarantee was unenforceable and that the bank had failed to issue a valid demand for payment. Modi further claimed he had not received demand notices from April 2018 or October 2025 because he was not in India at the time.
The court systematically rejected these arguments, finding that:
* The notices were properly served, including the October 2025 notice sent to his UK prison.
* Modi was aware of the bank’s demands, as evidenced by his legal representatives receiving copies of the 2018 notice in 2019.
* Modi had previously emailed the bank acknowledging that media reports regarding his legal troubles had crippled his group’s operations and rendered them unable to meet their liabilities.
Broader Legal Context
This ruling serves as another major blow to Modi as he remains in the United Kingdom contesting extradition to India. While the UK High Court rejected his attempt to challenge extradition earlier this year, Modi is currently seeking further legal intervention from the European Court of Human Rights. He remains a primary target for India’s CBI and Enforcement Directorate in connection with the PNB fraud case.
