UK court upholds Bank of India's $10.7 million claim against Nirav Modi
A UK court has held fugitive diamantaire Nirav Modi personally liable for a debt of more than $10.7 million owed to Bank of India, rejecting
A UK court has held fugitive diamantaire Nirav Modi personally liable for a debt of more than $10.7 million owed to Bank of India, rejecting his argument that the personal guarantee he executed was unenforceable under India's foreign exchange laws. In a judgement delivered on Tuesday and reviewed by Mint, the High Court of England and Wales ruled that Modi must honour a personal guarantee he signed in 2013 in favour of Bank of India in connection with credit facilities extended to Firestar Diamond FZE, a Dubai-based company of Modi's Firestar Group. The court held that the guarantee remained valid and enforceable under Indian law and that the bank had properly invoked it after the borrower defaulted. The court said the October 2025 demand of the bank was valid. “That was a valid demand for a liability to the Bank under the Personal Guarantee.
The Personal Guarantee is not, as a matter of Indian law, void or unenforceable. Mr Modi is therefore liable under the Personal Guarantee to the Bank for the principal amount due of USD 4,105,189.34,” the court said. Also Read | RBI eases forex exposure rules for banks availing special swap facility The dispute arose from a facility agreement under which Bank of India advanced funds to Firestar Diamond FZE. After the company failed to repay the loan, the bank obtained summary judgment against Firestar in 2024 for $4.1 million in principal. It subsequently sought to recover the dues from Modi under the personal guarantee. Modi challenged the claim on several grounds, including that the guarantee was invalid because approval from the Reserve Bank of India (RBI) had not been obtained under the Foreign Exchange Management (Guarantees) Regulations, 2000. The court rejected the argument, relying on expert evidence on Indian law.
It held that the absence of RBI’s approval did not automatically render the guarantee void or unenforceable. The judgement noted that RBI approval could be obtained retrospectively and that the responsibility for obtaining such approval rested on Modi rather than the bank. The court also rejected Modi's contention that the bank had failed to serve a valid demand notice under the guarantee. It found that the October 2025 demand had been sent to the contractual address specified in the guarantee and therefore constituted valid service. Modi also challenged the bank's calculation of interest after Libor (London interbank offered rate)—a global benchmark used to price loans—was discontinued in September 2024. Also Read | RBI allows banks to give loans for FCNR deposits He argued that Bank of India’s decision to switch to secured overnight financing rate (SOFR), a benchmark that has largely replaced Libor, amounted to changing the terms of the loan agreement without his consent.
The BriefWire