NEW DELHI – Fugitive jeweler Mehul Choksi has been arrested in Belgium and will file an appeal for release, his lawyer told Reuters on Monday, seven years after details of his involvement in one of India's biggest bank frauds became public.

The Indian government had sent a request for Choksi's extradition prior to his arrest, a source with India's Enforcement Directorate told Reuters.

Punjab National Bank (PNB), India's second largest state-run lender by assets, had announced in 2018 that it had discovered alleged fraud worth $1.8 billion at a single branch in Mumbai.

The bank had filed a criminal complaint with India's federal investigative agency against several entities including billionaire jeweler Nirav Modi and Choksi, his uncle and the managing director of Gitanjali Gems, saying they had defrauded PNB.

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Indian federal police filed fraud charges against Choksi, Nirav Modi and others in connection with suspected involvement in fraudulent transactions that led to huge losses for PNB.

The two diamond tycoons have denied any wrongdoing.

Choksi said in a letter in 2018 that the "investigating agencies were acting with pre-determined minds and interfering with the course of justice".

Choksi's lawyer Vijay Aggarwal told Reuters on Monday: "An appeal will be filed for his release, on grounds that he is undergoing cancer treatment and is not a flight risk." He said that Choksi had not committed any offence in Belgium.

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Nirav Modi fled India in 2018 before details of his alleged role in the case became public. He was arrested in Britain in 2019 and remains in custody there, although he has lost one extradition appeal.

Modi grew up in Belgium's diamond polishing hub Antwerp, and Choksi used to visit the city frequently, even before the financial scam was discovered.

Diamond traders in Mumbai have said Antwerp would have been an ideal place for Choksi to take refuge, as he knows people there and remains connected to those in the business.

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Last week, a Pakistani-born Canadian businessman accused of helping orchestrate the 2008 attacks in Mumbai landed in New Delhi after the US extradited him in the first such transfer in a terrorism case.