The 1992 scandal, which implicated brokers, bankers and officials of state-owned firms in a conspiracy to siphon off money from government securities transactions for using it on the then-booming Bombay Stock Exchange, wiped out a quarter of the market capitalisation.

Hundreds of spectators and journalists jostled for space in the packed court room as Judge MS Rane declared Mehta guilty of fraudulently diverting into his own account money belonging to carmaker Maruti Udyog Ltd.

Maruti Udyog is a joint venture between the Union Government and Suzuki Motor Corporation.

"Mehta in furtherance of criminal conspiracy did dishonestly misappropriate four bankers' cheques aggregating Rs38.97 crore...drawn by Maruti Udyog," the judgment read.

Apart from Mehta, the court convicted three others including two bankers and an officer of Maruti Uduyog and exonerated another official of the car firm.The discovery of the scam in 1992 caused a uproar as thousands of new investors, attracted by the phenomenal rise in stock prices, lost money in the subsequent collapse.

Mehta, once known as the Big Bull because of his aggressive trading style, will be sentenced on Tuesday. This is the first guilty conviction handed down to Mehta. He has another 23 cases filed against him.

The Central Bureau of Investigation has filed 44 cases related to the scam. Mehta said he would appeal to the Supreme Court to stay the high court conviction. "I have great faith in the country's judiciary," Mehta told Reuters.

The judgment dented stocks which had risen 2 per cent in early trade. They closed at 4,715.67, down 42.15 points or 0.89 percent from Friday's close. Speculators were unsettled over fears that Mehta might have outstanding commitments in the market. But Mehta said the market should recover soon."I have no financial commitments in the market, nor have I any exposure anywhere. It's all a sentimental reaction which will get over in the next two to three days," he said. Despite being stripped off his stock broker's card, Mehta's views continues to influence the market and rumours of him buying any stock through a proxy often sends prices shooting higher.

He told Reuters in his sprawling apartment in a residential suburb of south Mumbai that he had had enough time to come to terms with the possibility of going to jail.

"When we are so blind as to what will happen the next moment, what's the point trying to bother about what will happen after some years," he told Reuters in between taking non-stop telephone calls from well-wishers. Apart from Mehta, others convicted are PK Manocha, former deputy manager of finance, MUL, Vinayak N Deosthali, ex-assistant manager, UCO Bank, and RN Popli, officer of ANZ Grindlays Bank, New Delhi.

The second accused in the case, Ambuj Jain, also a former MUL executive, was given the benefit of doubt and cleared of all charges.F While all four were convicted for offences under Sections 120-B (conspiracy) read with 409, 467, 468 and 471 of the IPC, the two officials , Manocha and Deosthali, were also convicted for offences under Sections of the Prevention of Corruption Act.

Mehta is also convicted of the offence under section 403 of the IPC (criminal misappropriation), while Manocha and Popli are convicted under section 409, IPC, V N Deosthali is convicted for offences under section 467, 468 and 471 read with 467 and 468 of the IPC.F The CBI filed the chargesheet in December 1994, and the trial commenced on July 22, 1998. The court found that Manocha had misused his official position to cause wrongful gain to Mehta.

The court held him guilty of being part of the conspiracy by delivering 35 lakh units of Unit Trust of India valued at Rs. 4.99 crore to Mohan Khandelwal, Mehta's attorney, against specific instructions of the MUL board. The court also indicted Manocha for delivering a cheque for Rs 10.11 crore (drawn by MUL on Canara Bank in favour of ANZ Grindlays Bank) to Anuj Kalia, who was known to Manocha as an employee of Mehta. The court convicted Deosthali for misuse of his official position to cause wrongful gain to Mehta. The CBI had charged Deosthali of having written to MUL on Jan 23, 1991, to deliver 35 lakh UTI units to Mohan Khandelwal, attorney of Mehta.

An amount of Rs 4.99 crore was credited to the MUL account in Bank of America (Delhi) by Mehta. MUL had borrowed this amount at a higher rate of interest for 32 days against physical delivery of the UTI units. On the reverse side, when the principal and interest was returned by MUL, an account payee banker's cheque from MUL's account in Canara Bank, Delhi was given to Anuj Kalia, an employee of Mehta.

This cheque, under instructions from Khandelwal was deposited into the account of Harshad Mehta in ANZ Grindlays, Delhi, and later transferred to Mehta's account in the same bank in Bombay.F Though the cheque was an account payee cheque in the name of Grindlays Bank, R N Popli was accused of having credited the same into Mehta's account in Delhi and then tranferred to Bombay.

Mehta then asked ANZ Grindlays, Bombay for a bankers cheque for the transfer of the amount to his account in UCO Bank, Haman Street Branch, Mumbai. The court held Deosthali guilty of forging the document (purporting to be valuable security) to issue a BR dated March 13, 1991, for Rs 10.11 crore with an intent to make MUL believe that UCO Bank was holding 70 lakh units of Unit Trust of India of the face value Rs seven cr at Rs. 14.45 per unit which UCO Bank was to deliver to MUL.