However, he was spared conviction under a harsher law which carries the death penalty for those convicted of abetting organised crime.

Police had claimed the 2000 movie "Chori Chori, Chupke Chupke" (Stealing Quietly) had been financed by Shah and produced by Nasim Rizvi at the behest of Dubai-based underworld don Chhota Shakeel.

The court has found Rizvi and another accused Abdul Rahim Allabux Khan guilty and convicted them under the Maharashtra Control of Organised Crime Act (MCOCA), which has a capital punishment option.

All three are expected to be sentenced on Wednesday, with Shah facing a sentence of up to seven years in jail and the other two life imprisonment, lawyers said.

Judge A.P. Bhangale convicted Shah under the Indian penal code instead of the more stringent MCOCA.

"He has been found guilty under Section 118, 383 and 387 of the Indian Penal Code for being aware of organised crime syndicates working during the financing of film 'Chori Chori, Chupke Chupke' and not setting the law in motion by informing the ... police of this activity," said Bhangale.

He said that Shah, by concealing the information, facilitated criminal activities such as extortion threats to film personalities during and even after the making of the movie.

The judge found that Rizvi and Khan had worked hand-in-glove and were involved in criminal conspiracy with Shakeel to threaten and extort money from film personalities.

During the trial, police played tapes in court showing recorded conversations between Shah and Shakeel.

However, the court rejected the tapes saying the conversation between Shah and Shakeel was "doubtful".

Shah, the producer of Bollywood's costliest move "Devdas" (Pining Lover), was first arrested in 2001 and charged with forging links with the underworld and using slush funds to make movies.