In a setback to city police, the Delhi High Court has upheld the acquittal of seven alleged terrorists, concurring with the trial court's verdict that they were nabbed after a 'fake encounter' in 2005 and were falsely implicated in the terror case.

A bench of Justices S. Ravindra Bhat and S.P. Garg upheld the acquittal, dismissing the police appeal against the trial court's verdict.

"If two reasonable conclusions are possible on the basis of the evidence on record, the appellate court should not disturb the finding of acquittal recorded by the trial court.

"We are of the view that the findings recorded by the learned trial court acquitting the accused are not perverse and require no interference," said Justice Garg, writing the verdict for the bench.

The court, however, modified the trial court's order for registration of an FIR against four policemen for faking the alleged encounter and other evidence to implicate the accused.

"It is improbable that the investigating team consisting of more than 15 police officers of different ranks from different police stations would conspire against accused residing at different places to falsely implicate them...

"The petitioners cannot be punished before they are found guilty...The Commissioner of Police is directed to inquire into role and conduct of the petitioners in the investigation of the case and take appropriate action in accordance with statute/rules," it said.

The police had said it had nabbed four of the seven accused after a shootout on night intervening July 1 and 2, 2005 near Delhi-Gurgaon border and had recovered a huge cache of arms and ammunition from them. The three were arrested later, it had added.

Police had said acting on a tip-off that the accused, planning a strike in Delhi and its satellite towns, including Gurgaon, would be coming to the capital, it had been waiting for them near the border.

It had added as the accused, later identified as Saqib Rehman, Nazir Ahmed Sofi, Gulam Moinuddin Dar and Bashir Ahmed Shah did not stop their car, they were chased by police team led by sub-inspector Ravinder Tyagi, who fired from his service revolver in response to firing by Saqib.

In its appeal, police also said they recovered one AK-47 rifle, two magazines, 130 live cartridges, 2 hand grenades and 3 UBGL grenades at the instance of Saqib and these crucial evidence were ignored by the trial court.

The lower court had acquitted all the accused saying that "the encounter alleged to have taken place on the fateful night did not take place at all and an absolutely false encounter was projected."

It had said the story of encounter was "carefully scripted in the office of the Special Staff, Delhi Police by its main author SI Ravinder Tyagi with the assistance of SI Nirakar, SI Charan Singh and SI Mahender Singh."

Trashing the police version, the lower court had said that the investigating officer (IO) did not explain as to why no 'independent public witnesses' were not associated during the arrest of accused after the encounter.

The IO did not intimate to his superior officers about the tip-off on alleged movement of accused, it had said, adding that the prosecution also failed to produce 'original daily diary entries'.

Out of 15 members of the raiding party, the prosecution examined only nine witnesses and failed to explain why other members of the raiding party were withheld, it said.

The investigating officer failed to explain as to why Tata Indica car allegedly seized at the spot was not searched immediately to recover the arms and ammunition lying therein, it said.