The UK Serious Fraud Office (SFO) has failed for a second time in its bid to bring a high-profile fraud case against five former directors of the firm behind Durex condoms.

A High Court judge rejected an application by the SFO to press ahead with a jury trial against the ex-SSL International directors and another from AAH Pharmaceuticals.

The six were accused of inflating sales figures in 1999-2000 in an alleged "trade loading" fraud, but Mr Justice Pitchers yesterday backed an earlier ruling at Chester Crown Court and dismissed the case.

One of the defendants - former SSL chief executive Iain Cater - said he was "very pleased" with the decision and that the prosecution should never have started.

In a statement, he said: "The SFO has failed in its declared standards of performance and its duty to review and consider, professionally and independently, the information forwarded to it." In Mr Cater's 21 years at SSL, the company floated on the stock market and turnover soared 25-fold.

But five years ago SSL suspected a complex fraud had overstated sales by £22 million (€32.5 million) and profits by £19 million. The alleged fraud centred on the legal practice of trade loading, which involves boosting sales in the short-term by selling supplies to a buyer before they are needed.

An SFO inquiry followed and Mr Cater was charged with fraud in November 2003 along with SSL's former UK finance director Christine Davenport, former UK sales director Brian Ruane, previous European managing director Dieno George, and Paul Sanders, who was group finance director. Colin Wilson, of AAH, was also charged.

But at a series of hearings in Chester this year, Judge Stephen Clarke dismissed the charges. At one of the hearings, he said: "This court cannot say the evidence is anywhere near sufficient to go to a jury. The prosecution's evidence is not sufficient for a jury to properly convict."

The SFO then took the rare step of applying for a voluntary bill of indictment to challenge the judge's decision. This was thrown out at the Royal Courts of Justice yesterday by Mr Justice Pitchers, who said he had "no doubt" that the application was "unsound" and should be "refused". SSL itself was not charged with any offences and nor were any of its present employees.