Yadav was accused of murdering CPI(M) MLC and trade union leader Ajit Sarkar in 1998.
"It is a regrettable decision, CBI must swiftly and effectively move the Supreme Court and appeal against it," CPI-M leader Sitaram Yechury told PTI.
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The High Court set aside the conviction and life imprisonment awarded to the controversial leader by a lower court in 2008.
A division bench comprising justices V N Singh and K K Lal acquitted Rajesh Ranjan alias Pappu Yadav and two other accused - Rajan Tiwari and Anil Kumar Yadav - of all charges in connection with the 1998 killing of Sarkar for want of evidence.
The court also directed the authorities to release Yadav from jail forthwith if he was not wanted in any other case.
Sarkar, a former CPI(M) legislator, was shot dead by unidentified persons in Bihar's Purnia district on June 14, 1998.
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