The Central Bureau of Investigation (CBI) stated on Monday that it has filed a fresh case against fugitive businessman Mehul Choksi and his Mumbai-based firm, Gitanjali Gems, for allegedly defrauding the Industrial Finance Corporation of India Ltd (IFCI) of Rs 22.06 crore. The case has been registered based on a complaint filed by IFCI in November 2020.

Choksi is already on the run for involvement in a previous case where he was accused of defrauding the Punjab National Bank (PNB) of Rs 13,000 crore, along with Nirav Modi.

In its complaint, IFCI had alleged that Mehul Choksi, his firm and other accused persons had been part of a criminal conspiracy to cheat IFCI between 2014 to 2018.

"In pursuance to the aforesaid criminal conspiracy, Gitanjali Gems Ltd, through its director, Mehul Choksi, approached IFCI, seeking financial assistance for meeting its long-term working capital requirement, and induced IFCI to sanction a corporate loan of Rs 25 crore in March, 2016. This loan was sanctioned and disbursed in favour of Gitanjali Gems," noted CBI's FIR.

IFCI has alleged in its complaint that relying on the representation, assurances and undertakings of Gitanjali Gems, as well as Mehul Choksi, and the value of the pledged jewels on the basis of valuation conducted by Surajmal Lallu Bhai & Co, Narendra Jhaveri, Pradip C. Shah and Shrenik R. Shah, it gave the entire loan amount of Rs 25 crore on the basis of security cover of two times the amount based on the pledge of shares and the pledge of the gold, diamond and gold studded jewellery.

According to the valuations submitted by four different valuers, the jewellery pledged was in the range of Rs 34-Rs 45 crore, on the basis of which IFCI sanctioned the loan asked for Choksi.

"It is further alleged in the complaint that Gitanjali Gems had started committing defaults in the repayment of loan instalments, and in order to recover the defaulted amount of the instalments, IFCI invoked the pledge, and out of total pledged 20,60,064 number of shares, IFCI could only sell 6,48,822 number of shares amounting to Rs 4.07 crore as the client ID of Mehul Choksi was suspended by NSDL," added the FIR.

In 2018, IFCI appointed two valuers, Markandeyaa (Mineral Consultants & Traders) and Aarch Consultants & Valuers, to conduct fresh valuations of the pledged jewels. The fresh valuation dropped the value of the pledged jewels by 98%.

The fresh valuations showed that the pledged jewellery could be valued at anything between Rs 70 lakh and a little over Rs 2 crore only, IFCI said.

CBI has stated that Mehul Choksi, with dishonest and fraudulent intentions, had colluded with the valuers to falsely inflate the value of the pledged jewels. "Further, it also came to the light that the diamonds are of low-quality lab prepared chemical vapour diamonds and other inferior-colour stones and not real gemstones," CBI said.

Gitanjali Gems's account was classified as Non-Performing Assets (NPA) on June 30, 2018. IFCI had suffered a loss of Rs 22.06 crore.

Along with Choksi, valuers Surajmal Lallu Bhai & Co, Narendra Jhaveri, Pradip C. Shah and Shrenik R. Shah have also been named in the FIR. Unknown public servants and unknown others are also named.

Searches have been conducted at around eight premises of the accused valuers in Mumbai and Kolkata, which led to the recovery of incriminating documents. Further investigation is currently underway.

Currently, Mehul Choksi is in Antigua; an extradition process is underway to bring him back to India.