Modi is living in a luxurious apartment situated in London's West End.
The ED was officially informed about UK Home Secretary Sajid Javid's move to forward the case to a London court about two days ago, sources told news agency PTI.
The newspaper said Nirav was wearing a £10,000 jacket, made from ostrich hide, when he was approached in the street.
India authorities in the past said that Modi was seen in the United Kingdom after fleeing the country previous year, yet London failed to act on the world-wide police alert requesting a provisional arrest of the fugitive, pending extradition proceedings.
'Nirav Modi is living in a "three-bedroom flat occupying half of a floor of the landmark Centre Point tower block, with views across London". The rent for a property like this is thought to be about £17,000 a month, while the paper pegged the price of the flat at £8 million.
Modi and Choksi, who have both denied wrongdoing, left India before the details of the fraud became public.
The ED and the CBI are investigating Modi, his uncle Mehul Choksi and others for alleged money laundering and corruption to perpetrate the alleged scam in the Brady House branch of the PNB in Mumbai that was unearthed previous year. When the publication asked Modi outside his office whether he'd applied for political asylum to enjoy such liberties, the billionaire refused to comment.
Despite his bank accounts being frozen by the Indian authorities and an Interpol red notice being issued for his arrest, Modi, a diamond jeweller whose designs have been worn by Hollywood stars, is now involved in a new diamond business based in London, the report said.
The revelation comes a day after Modi's 30,000 sq ft seaside mansion at Kihim beach in Maharashtra's Raigad district was demolished by authorities using explosives for alleged violation of coastal regulation rules.
Forty-eight-year-old Nirav was spotted in a tony neighbourhood of London by British newspaper The Telegraph. Nirav Modi has also got UK's Nation Insurance Number, which is normally provided to United Kingdom nationals only and allows people to do business, carry out bank transactions, etc, legally. "It is not clear why the British government has given him a national insurance number and yet has apparently failed to act on the Interpol red notice".
The UK Home Office declined to comment on the case, while courts have no record of any extradition case being opened against Nirav, the report said.