The bench, comprising justices Sujatha V Manohar and BN Kirpal, admitted the appeal of both the accused and ordered that the sentence will stand suspended till pendency of the statutory appeal.

Justice SN Variava of the special court had convicted the duo on August 14, and on August 27 sentenced them to seven years rigorous imprisonment and a fine of Rs 1.5 lakh each. The accused have pleaded in their appeal before the apex court that they have committed only a technical and not an economic offence. Hence, the special court judge was not justified in convicting them and imposing the sentence.

The special court had given them two weeks to obtain a stay on theimprisonment from the SC. The other two accused named in the case - former Canfina executive vice-president MK Ashok Kumar and assistant vice-president N Balasubramanium - were acquitted by the special court.

While being heard on the sentence, Hiten Dalal had submitted to the court that the offences under sections 409 and 411 of the Indian Penal Code (IPC) were the result of an official transaction in the normal course of business and that the said transaction was a technical offence.

Dalal had purchased the Cancigo units (issued by Canara Bank Mutual Fund) in September, 1991, out of his funds. He kept the units, which were untransferable and bought in the name of Andhra Bank (Rs 11 crore) and Andhra Bank Financial Services (Rs 22 crore), with him.

In February, 1992, Dalal offered these units to Canfina, to which he owed around Rs 25 crore. He obtained the amount set off against these units, while the excess amount (around Rs 7.99 crore) was paid back to him by Canfina's Mumbai office.

After thesecurities scam broke out, Canfina not only filed a civil suit in the special court claiming ownership of these units but also complained to the Central Bureau of Investigation (CBI).

According to the CBI, Hiten Dalal gave the securities to Canfina with the full knowledge that these were not held in his name and thus, left Canfina with `dud documents'.

Dalal was found guilty and sentenced under section 120 (B) of the IPC under charges of criminal conspiracy read with sections 409 (criminal breach of trust) and 411 (receiving a stolen property) of the code.

Canfina's S Mohan was given seven years' rigorous imprisonment u/s 120(b) read with 409 and 411 of the IPC. Having been found guilty under sections 13 (1) (C), 13 (1) (D) read with section 13 (2) of the Prevention of Corruption Act (taking undue advantage of the post and performing a pecuniary act), Mohan has also been sentenced to five years' imprisonment.