A mistrial was declared yesterday after jurors were unable to agree on a verdict in the case of a Fairfax City disco owner accused of burning down his financially ailing business to collect insurance.

The five-man, seven-woman jury in the Fairfax County Court arson trial of Manoutcher (Manny) Rahnama, part owner and majority stockholder of the Bachelors II disco, announced it was hopelessly deadlocked after six hours of deliberations.

"I don't think it would serve any purpose to continue deliberations," the jury foreman said shortly after 4 p.m. Some jurors said afterward they had been deadlocked 7 to 5 in favor of acquittal, and that only one additional juror had been swayed to vote for acquittal in the final hour of "frequently heated deliberations."

Rahnama, a Tehran native who moved to Virginia in 1963, could have faced a 2- to 10-year jail term if convicted of the March 20, 1979, arson that destroyed the establishment located at 10906 Lee Hwy.

Prosecutor Raymond Brownelle, acknowledging at the trial's outset that his evidence was "95 percent circumstantial," argued that it was "economically advantageous" for Rahnama to commit arson to recoup business losses.

Brownelle also produced an eyewitness, Otis McCray, who testified last Wednesday that one of two men seen running from the scene of the early morning fire was Rahnama.

But defense attorneys G. James Frick and Stephen Armstrong produced their own witness, Robert Kendzirek, who testified he was standing with McCray at the time and that neither of the two fleeing men was Rahnama.

Although prosecution witnesses testified that Rahnama was five months behind on rent and that he had deliberately falsified liquor receipts in order to keep state liquor license, defense lawyer Armstrong characterized the prosecution's case as "garbage in and garbage out."

"One eyewitness said it was Rahnama, then the other eyewitness said it wasn't," said the juror. "They should have been pressed more to see if one of them would break."

Said another juror: "It would have helped a lot if the defendant had testified. It's really a shame that it had to be a hung jury."