HIGHLIGHTS

UK Court Orders Nirav Modi to Pay Bank of India ?100 Crore: A Major Win in Loan Recovery Case

On 23 June 2026, the London Circuit Commercial Court ruled that fugitive businessman Nirav Modi must pay more than USD 11.5 million (approximately ?100 crore) to Bank of India under a personal guarantee he signed in 2013.

The judgment is a significant victory for the public sector bank in its effort to recover unpaid dues. Importantly, the case is not about the Punjab National Bank (PNB) fraud. It is a civil commercial dispute concerning the enforcement of a loan guarantee.

Background of the Dispute

The case began with a loan granted by Bank of India in July 2012 to Firestar Diamond FZE, a Dubai-based company belonging to the Firestar Group.

To secure the loan, Nirav Modi executed a personal guarantee on 3 August 2013. By signing the guarantee, he promised that if the borrowing company failed to repay the loan, he would personally be responsible for the outstanding amount.

In February 2018, allegations of the massive PNB fraud involving companies linked to Modi and his uncle surfaced. The financial crisis severely affected the Firestar Group. Modi himself admitted in an email that the companies had effectively stopped functioning, making repayment difficult.

Following the default, Bank of India recalled the loan and demanded repayment from both Firestar Diamond FZE and Nirav Modi. When no payment was made, the bank initiated legal proceedings in the United Kingdom.

Court Proceedings

In March 2024, the London court granted summary judgment in favour of Bank of India for the outstanding principal amount of USD 4.1 million, along with applicable interest.

The remaining proceedings focused on whether Modi remained liable under the personal guarantee and whether the bank had followed the correct legal procedure before enforcing it.

During the case, Modi raised several objections. He argued that:

• the personal guarantee was not enforceable under Indian law;
• he had not received valid repayment notices;
• the bank had no legal basis to terminate the loan; and
• the circumstances following the PNB fraud did not justify immediate recovery.

What the Court Decided

Justice Simon Tinkler rejected all of Modi's arguments and ruled entirely in favour of Bank of India.

The Court held that:

• the repayment notices were validly served;
• the personal guarantee remained legally enforceable;
• the bank was entitled to recall the loan; and
• Modi was personally liable for the outstanding debt.

The Court observed that the collapse of the Firestar Group after the PNB scandal had a "material adverse effect", making it reasonable for the bank to demand immediate repayment.

As a result, the Court ordered Modi to pay:

• Principal amount: USD 4.1 million;
• Accrued contractual interest; and
• Further interest until full payment, taking the total liability to more than USD 11.5 million (approximately ?100 crore).

Separate from the PNB Fraud Case

Although the dispute arose after the PNB controversy, the Court clarified that this case does not determine Modi's criminal liability in the alleged fraud.

It is purely a commercial loan recovery case based on the personal guarantee executed in favour of Bank of India.

The Court made no findings regarding the criminal allegations pending against Modi in India.

Extradition Proceedings Continue

Nirav Modi has remained in a London prison since 2019, following his arrest on India's extradition request.

In March 2026, the UK High Court rejected his attempt to reopen extradition proceedings, bringing him closer to being returned to India. He has since approached the European Court of Human Rights seeking to delay his extradition.

Those proceedings are separate from the Bank of India recovery case.

Why This Judgment Matters

The ruling reinforces the legal principle that a personal guarantee is a binding contractual obligation. A guarantor cannot avoid liability merely because the borrower later becomes insolvent or faces financial collapse.

For banks, the judgment strengthens confidence that guarantees executed for international commercial loans can be enforced through foreign courts when necessary.

It is also an important reminder that civil recovery proceedings and criminal prosecutions are independent legal processes. While the criminal cases against Nirav Modi continue in India, this judgment focuses solely on recovering money owed under a legally enforceable guarantee.

Reference

• LiveLaw
• The Hindu
• The Telegraph India
• Hindustan Times
• The Economic Times
• Moneycontrol
• News18
• CNBC TV18
• Outlook India
• WION