A London High Court has ruled that fugitive diamond businessman Nirav Modi must pay more than $10.7 million (over Rs 100 crore) to Bank of India under a personal guarantee linked to a loan given to one of his companies. The judgment is being seen as a major legal victory for the public sector bank in its efforts to recover dues from Modi, who is currently lodged in a London prison while fighting extradition to India.
Justice Simon Tinkler, delivering the judgment in the London Circuit Commercial Court on Tuesday, said, โMr Modi is liable under the personal guarantee to the bank for the principal amount due of $4.1 million (approximately Rs 38.9 crore). The interest calculated on the basis set out by the bank is to be added. Mr Modi has not provided any defence to explain why the bank was not entitled to that sum.”
What was the case about?ย
The dispute relates to a loan provided by Bank of India to Firestar Diamond FZE, a Dubai-based company, in 2012. A year later, Nirav Modi signed a personal guarantee, making himself responsible for repaying the loan if the company failed to do so.
After the alleged Punjab National Bank (PNB) fraud came to light in 2018, the bank recalled the loan and demanded repayment from both the company and Modi. According to the court, these demands went unanswered.
Court rejects Nirav Modi’s arguments
During the proceedings, Modi argued that the personal guarantee could not be enforced. He also claimed that he had not received valid repayment notices from the bank and questioned the bank’s decision to terminate the loan arrangement.
However, Justice Simon Tinkler rejected these arguments and held that Bank of India was entitled to recover the outstanding amount. The court said Modi had failed to provide a valid defence explaining why the bank should not receive the money owed under the guarantee.
A key issue in the case was whether Modi had received the repayment notices sent by the bank. Modi denied receiving some of the notices, claiming he was not in India when they were delivered. However, the court found that the notices had been successfully served.
The judgment noted that one notice was sent to the London prison where Modi is currently being held, while another had previously been shared with his legal team.
Impact of PNB fraud considered
The court also referred to the impact of the alleged PNB fraud on the Firestar Group. Justice Tinkler observed that after the fraud allegations surfaced in 2018, it was reasonable to conclude that the financial position of Firestar companies had been significantly affected, increasing the risk to lenders.
The judgment cited an email sent by Modi in February 2018, in which he acknowledged that the situation had affected the group’s ability to meet its financial obligations.
In its final ruling, the court upheld the validity of the personal guarantee signed by Nirav Modi and confirmed that Bank of India is entitled to recover the principal amount along with applicable interest.
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