Fugitive businessman Nirav Modi has suffered a major setback after a London court ordered him to pay more than USD 10.7 million (over ₹100 crore) to Bank of India in a loan recovery case linked to one of his overseas companies. The ruling marks another significant development in the series of legal challenges facing the businessman, who has remained in UK custody since 2019 while fighting extradition to India.
London Court Rules In Favour Of Bank Of India
The decision was delivered by the London Circuit Commercial Court, which held that Nirav Modi is personally liable for repaying the outstanding dues because he had signed a personal guarantee backing a loan extended by Bank of India to Firestar Diamond FZE, a Dubai-based company belonging to his Firestar Group.
The court concluded that once the borrowing company defaulted on its obligations, the personal guarantee became enforceable, making Modi legally responsible for settling the debt.
Loan Dates Back To 2012
The dispute originates from a loan facility granted in 2012, years before the massive Punjab National Bank fraud allegations surfaced.
On August 3, 2012, Nirav Modi signed a personal guarantee that committed him to repay the loan if the borrowing company failed to meet its financial obligations. This guarantee eventually became the central point of the legal battle between the bank and Modi.
The borrowing company, Firestar Diamond FZE, later defaulted, prompting Bank of India to initiate independent recovery proceedings against Modi under the terms of the guarantee agreement.
Liability Exceeds ₹100 Crore
According to the court ruling, Nirav Modi’s financial liability includes approximately USD 4.1 million as the principal outstanding amount, alongside accumulated interest and other applicable charges.
With interest added over time, the total amount payable has crossed USD 10.7 million, equivalent to more than ₹100 crore.
The judgment significantly strengthens Bank of India’s efforts to recover public money tied to the defaulted loan.
Court Rejects Modi’s Defence
During the proceedings, Nirav Modi’s legal team argued that the bank had failed to issue valid repayment demands and lacked sufficient grounds to accelerate the loan recovery process.
His lawyers also claimed that he had not properly received certain notices issued in April 2018 and October 2025 because he was outside India during that period. However, the London court rejected these arguments.
The court ruled that the notices had been correctly served and noted that one of the notices was even sent to the UK prison where Modi is currently being held. Judges also observed that his legal representatives had already received copies of earlier notices, indicating that he was aware of the bank’s repayment demands.
Impact Of The PNB Fraud Investigation
Court records noted that the financial health of Nirav Modi and the Firestar Group deteriorated significantly after investigations into the Punjab National Bank fraud emerged in early 2018.
That year, the Central Bureau of Investigation registered its first FIR in connection with the alleged fraud.
Investigators have previously alleged that the broader banking fraud involved transactions worth nearly USD 2 billion, making it one of India’s biggest financial scandals.
The judgment also referenced an email sent by Modi, in which he reportedly acknowledged that adverse publicity and investigations had severely damaged the group’s business operations and its ability to meet liabilities.
Extradition Battle Continues
Apart from the loan recovery case, Nirav Modi continues to fight extradition to India.
Earlier in 2026, the UK High Court rejected his attempt to reopen challenges against his extradition after considering assurances provided by the Indian government.
He is currently pursuing legal remedies before the European Court of Human Rights in an effort to stop his extradition to India.
Indian agencies, including the CBI and the Enforcement Directorate, continue to pursue cases against him related to the alleged Punjab National Bank scam.
A Significant Victory For Recovery Efforts
The latest ruling is being viewed as an important victory for Bank of India because it reinforces the legal validity of personal guarantees in international financial disputes.
It also adds another layer of legal pressure on Nirav Modi at a time when his extradition battle is entering its final stages. Beyond the immediate financial recovery, the judgment sends a broader message that banks can pursue international legal remedies to recover defaulted loans backed by personal guarantees.
