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He was found COVID-19 positive in the Tihar Jail on April 22 and was admitted to the All India Institute of Medical Sciences (AIIMS) on April 24.
According to a senior police officer, Rajan was brought back to Tihar on Tuesday as he had recovered.
On Friday, the jail administration had dismissed reports claiming that Rajan had died.
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Rajan, 61, is lodged at the high-security prison since his arrest after deportation from Bali in Indonesia in 2015.