Overvalued, low quality jewels: How Mehul Choksi obtained a loan of Rs 25 crore

Fugitive businessman, Mehul Choksi pleaded overvalued, low quality laboratory prepared diamonds and gemstones to get a loan from the Industrial Finance Corporation of India Ltd (IFCI), a government entity in 2016, the Central Bureau of Investigation said.

In its latest chargesheet, the CBI said that the studded jewellery, which had been pledged, was already under pledge for another corporate loan availed by of Choksi's companies earlier.

The fresh chargesheet would be used by the CBI to convince the Interpol that Choksi is a habitual offender. India is looking to get Choksi extradited from Antigua and Barbuda, where he is currently residing, a HT report said.

This is an important move as India looks to get Choksi extradited. He had alleged that the Indian agents abduced him from Antigua and Barbuda in May 2021, following the Interpol had withdrawn its Red Notice.

India has however vehemently contested the decision by the Interpol.

Choksi is wanted by India in the $2 million Punjab National Bank fraud case.

The latest case against the fugitive businessman was taken up by the CBI last year. It pertains to a loan of Rs 25 crore taken from the IFCI Ltd, by pledging his company's shares as well as diamonds and gold jewellery.

The CBI has named his company Gitanjali Gems Ltd and valuers, Surajmal Lallu Bhai and Co, Narendra Jhaveri, Pradip C Shah and Shernik Shah also in the case.

The CBI alleged that four different valuers, in connivance with Choksi had submitted inflated valuations, which ranged from Rs 34 crore to Rs 45 crore. Based on this the IFCI disbursed the loan of Rs 25 crore into the account of Gitanjali Gems Ltd on September 30 2018. On the same day the entire loan amount was diverted to Premier Intertrade, a partnership firm that is controlled by Choksi, the CBI also said in its chargesheet.

After Gitanjali Gems failed to repay the loan amount, the IFCI got a fresh valuation of the 896 pieces of jewellery done through two valuers. They reported that the value of the jewellery is Rs 2.03 crore and Rs 76 lakh respectively. This was around 98 per cent less than what was declared by Choksi.

The CBI said, " the valuers also observed that the diamonds are of low quality lab prepared chemical vapour diamonds and other inferior colour stones and not real gemstones."

The CBI also got an independent valuation of the pledged jewellery done through two government approved valuers in the presence of an independent witness. It was revealed that the value of the jewellery to be Rs 69 lakh and Rs 76 lakh respectively. It was also confirmed that the jewels were of inferior quality.

The chargesheet read, " investigation thus revealed that the accused persons in conspiracy with each other, induced the bank in sanctioning the loan amount by submitting highly inflated and false valuation reports of the pledged jewellery."