Mumbai: In a setback for CBI, gangster Chhota Rajan was acquitted by a special court two decades after he was booked for threatening a builder, with the judge noting the prosecution has failed to prove the charge as nothing incriminatory was found during witnesses' testimonies.

The gangster will, however, continue to remain in the Tijar Jail where he is serving a life term for the murder of Mumbai-based crime reporter J Dey.

While acquitting Chhota Rajan on Thursday, special judge AM Patil of the Maharashtra Control of Organised Crime Act (MCOCA) court noted that the most reliable witness of the prosecution is not certain whether the person who had called him on the phone to threaten the builder was indeed Chhota Rajan.

The Central Bureau of Investigation (CBI), which investigated the case, stated that real estate developer Nandkumar Harchandani had received multiple threats in the name of Chhota Rajan, asking him to clear the dues he purportedly owed to some businessmen.

The prosecution maintained Harchandani had invited displeasure of the accused (Chhota Rajan) in the matter of payment of money who hatched a plan to teach a lesson to the builder.

Rajan, through his accomplices, had allegedly told Harchandani to stop work at the construction site, it said.

In September 2004, seven unidentified persons entered Harchandani's office and fired at his accountant, but he escaped narrowly.

The court stated that nothing incriminatory against the present accused came on record during the testimonies of two eyewitnesses examined by the prosecution.

"The most reliable witness against the present accused is Irshad Shaikh, who received Rajan's alleged call about the threat. But, during his cross-examination, he admitted that he is not certain whether the person who made the call was 'Chhota Rajan' or somebody else. This is the crucial admission given by this witness, which goes to the very roots of the case," the judge stated.