The prosecution said it will recommend to the Maharashtra government to file an appeal against the acquittal in the Bombay High Court.
The court has acquitted two persons, former assistant inspector Dilip Kamat and Ahmed Turk (an aide of Telgi), Special Public Prosecutor Pradeep Gharat.
In 2006, seven accused, including Telgi, pleaded guilty in the case, which dates back to 2003.
Gharat said Kamat was the Investigation Officer of the stamp paper case registered at Dharavi Police station here.
Allegation against Kamat was that he extorted money from the accused and illegally detained one of them for around three days.
Gharat also said Kamat allegedly tampered with the seized stamp papers and failed to seal and dispatch them to the Indian Stamp Paper Press for checking their genuineness.
Kamat was charged with conniving with Telgi and facilitating his illegal activities, while Turk was allegedly one of the associates of Telgi, the scam's mastermind, he said.
The prosecution examined 28 witnesses in the case but the court did not accept its evidence and acquitted Kamat and Turk.
"I will certainly write (to the Government) and recommend that an appeal be filed against the acquittal in the high court," Gharat said.
The multi-crore scam, run by Telgi, came to light in mid- 2002 after seizure of counterfeit stamps and stamp papers in Pune. Later, investigations revealed the scam was spread over nearly a dozen states. Several cases were filed in these states in connection with the scam.
The scam involved printing and sale of counterfeit stamps and stamp papers by a crime syndicate led by Telgi, who was later convicted and sentenced to multiple years in jail.
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