Dalal purchased the Cancigo units (issued by the Canara Bank Mutual Fund) in September 1991 out of his funds. The units were, however, bought in the name of Andhra Bank (Rs 11 crore) and Andhra Bank Financial Services (Rs 22 crore). Instead of delivering these units, Dalal kept them. In February 1992, he offered these units to Canara Bank Financial Services (Canfina).

As Dalal owed considerable money to Canfina, he obtained the setoff against these units, while the excess amount was paid back to him by Canfina's Mumbai office.

After the securities scam was detected, these Cancigo units were traced at the Mumbai office. Fearing that the units would land in the hands of the custodian appointed under the SpecialCourt Act, Canfina decided to file a suit in the special court claiming ownership of these units.

Hiten Dalal was one of the defendants in the suit, while the remaining three were Canfina employees - all based in Bangalore. They included the chief dealer in the front office, MK Ashok Kumar, assistant dealer S Mohan and Balasubramanium, working in the back office.

In the suit, Canfina claimed that Hiten Dalal had `beneficial interest' in the deal and since it paid for these units, it was also the owner. The suit was, however, dismissed by justice Variava.

After this, Canfina lodged a formal complaint with the CBI alleging `breach of trust' against the three employees. According to Canfina, they were liable to be punished under section 409 of the Indian Penal Code as they misused their position and provided deficient units to the company.

The CBI filed the chargesheet before justice Variava. Towards the end of the trial, it came to the fore that Hiten Dalal had contravened the Benami Transactions(Prohibition ) Act. The units were purchased in somebody else's name and can be classified as `benami' as per section 2 of the act, said CBI counsel VC Gupte, adding that the subsequent transfer to the units was also liable to be confiscated.