T
he fugitive diamond jeweler Nirav Modi has once again been hit by an adverse verdict, but this time, not in the criminal court where he is facing an extradition petition but far away. In an unprecedented verdict delivered on Tuesday, the London Circuit Commercial Court ordered Nirav Modi to personally pay more than $10.7 million—more than ₹100 crore—to the state-owned Bank of India in a civil case regarding a loan taken by his Dubai-based company over a decade ago.
The verdict delivered by the commercial court comes at a time when Nirav Modi is facing an extradition case from the criminal court. The PNB fraud case is one wherein Modi has been named as the main accused for criminal conspiracy and fraud amounting to roughly ₹13,857 crore.
But the civil suit against him is a simple recovery suit filed by a bank that has lent money under a personal guarantee signed by him.
The background to this case dates back to 2012, long before Modi's name became notorious throughout the country. The Bank of India had granted loan facilities to Firestar Diamond FZE, a Dubai-based firm that was one among the companies owned by Modi's Firestar Group of firms.
As is common in cases of corporate loans, Bank of India felt the need for some security beyond just the promise made by the corporate borrower. Hence, in August 2012, Modi himself signed an agreement guaranteeing that in case of default on the part of Firestar Diamond FZE, he would himself pay the amount of the loan.
For some time, all this was just part of routine paperwork in connection with the normal business loan. However, things took a dramatic turn in February 2018 when the Central Bureau of Investigation (CBI) filed their first FIR in relation to the PNB scam, wherein Modi, along with his uncle Mehul Choksi, was charged with carrying out one of India's biggest banking scams with the help of fake letters of undertaking.
Following this, the financial well-being of Firestar Group completely deteriorated. As a result, Firestar Diamond FZE became defaulters on their loan payments at Bank of India. As a consequence of all this, the bank decided to move against the personal guarantee taken from Modi back in 2012.
As claimed by the bank, it had issued many demand notices to Modi throughout the years, requesting him to pay the bank back by meeting his obligation under the guarantee. However, the bank says that even after all these notices were issued, no amount was paid to them. Finally, in an attempt to do something, the Bank of India has approached the London Circuit Commercial Court because it is much easier to get such legal action enforced when the culprit himself is physically present there, which is the case with Modi, who has been in the UK for many years.
A multi-level defense strategy was used by the legal team of Mr. Modi. Firstly, they claimed that the personal guarantee could not be enforced. Secondly, they stated that there was no valid reason for "acceleration of the debt" by the bank.
In other words, it was not reasonable for the bank to claim payment of the entire debt at once instead of waiting until the end of the originally planned period. Thirdly, and most importantly, it was claimed that Mr. Modi did not receive any demand letters in April 2018 and October 2025, since he happened to be out of India at the time.
Justice Simon Tinkler, presiding over the case, rejected all three of Modi's arguments.
The issue of proper delivery of the notices raised in defense by Modi was dismissed by the court due to clear facts that they had been received. In particular, the representatives of Modi had gotten a copy of the notice of 2018 in 2019—thus, denying any claims regarding their non-receipt by the defendant. As for the second notice of 2025, it had been actually sent directly to HMP Thameside, the very prison where Modi was kept at the moment.
As for the question of the validity of the bank's decision to accelerate the loan, Judge Tinkler referred to the email written by Modi at the period when the fraud allegations occurred. He recognized the worsening financial position of the Firestar Group and the possibility of failure to cover its liabilities. Thus, starting from February 2018, it was absolutely legitimate for the bank to believe that Firestar Diamond FZE, together with all companies belonging to the Firestar Group, would be significantly affected by the PNB scandal. Therefore, the bank had every reason to consider the loan a risky one and call it back before schedule.
Now that Modi's defenses were rejected, the courts ruled that he is personally responsible under the guarantee clause for a principal amount of around $4.1 million (equivalent to ₹38.9 crore) along with all the accumulated interest from the years of not making the payment. On adding interest to the principal amount, the total amount to be recovered was well above $10.7 million, thus becoming equal to more than ₹100 crore.
However, one should note here that this was not completely unexpected. This judgment is based on an existing summary judgment in favor of the bank for the principal amount, which was issued by the court in March 2024.
Landing a court verdict is a task, but recovering money is a whole other story, particularly when trying to hunt down a fugitive who has spread out his empire by using shell companies and offshore operations across many countries.
In order to recover money from Indian banks or through the enforcement agency, one needs to adopt a strategy that includes looking into assets, issuing freezing orders, and hunting down specific bank accounts.
To make things even more complicated, recent leaks like the Pandora Papers in October 2021 showed how Modi's sister created a separate offshore company right after Modi fled India, thereby giving an indication of how difficult the trail of assets would be.
The Enforcement Directorate alone has attached gems and bank deposits of over ₹250 crore associated with the Nirav Modi group in Hong Kong.
This judgment has been viewed by other public sector banks in India as a kind of precedent, where one can prove the efficacy of going for civil recovery of economic offenders in international courts, notwithstanding how many years have passed since then.
In view of the total estimated amount of money involved in the fraud by PNB of nearly ₹13,857 crore, ₹100 crore is just a small portion of it. However, symbolically speaking, this judgment proves that when a person runs from the jurisdiction, he cannot evade his financial liability that easily.
At present, Nirav Modi stays under custody in the UK, and his appeals regarding extradition were defeated in both the High Court and Supreme Court of the UK. It is unknown whether Bank of India would be able to claim its right on the awarded sum of ₹100 crore.
