Division bench of Justices Bilal Nazki and S A Bobde dismissed the appeal as the prosecution failed to clarify the basic law point in the case.

Two British nationals, Duncan Grant and Allen Waters, who run 'Anchorage', a shelter for children, were acquitted by the court on Wednesday citing lack of evidence. The duo was accused of indulging in paedophilia with children staying in the shelter.

William D'Souza, an Indian who allegedly aided the two, was also acquitted in the case.

Earlier in March 2006, the trio were convicted by a Sessions Court and the two Britons got six years rigorous imprisonment. D'souza had been sentenced to three years imprisonment.

They had appealed to the Bombay High Court seeking an acquittal, while the state had appealed for an enhancement of the sentence, which was struck down.

Childline, an NGO which had filed a police complaint against Grant and Waters, had sought a stay on the judgement, Yug Mohit Chowdhary, counsel for the NGO, said.

Grant and Waters, both former British Royal Navy personnel, had been convicted by the session court under Sections 377 (unnatural sex) and 373 (buying minor for purposes of prostitution) of the IPC.

The duo had also been ordered to pay a fine of 20,000 pounds each by the session court.

Anchorage Shelter Home in Colaba in south Mumbai was set up by Grant for poor street children of the area. Two other homes were also set up in Cuffe Parade in south Mumbai and Murud in neighbouring Raigad.