A similar order had been passed earlier in the 2012 Pune serial blasts case.
The crime branch of the police had arrested these men in connection with email sent to media houses and government offices minutes before blasts in Surat, Delhi and Hyderabad, allegedly carried out by IM.
Mumbai Police's spokesperson Dhananjay Kulkarni said police will challenge the order.
As the special MCOCA judge A L Pansare dropped the charges under the Act, the case is likely to be assigned to a regular court now.
A series of 21 blasts had rocked Ahmedabad on July 26, 2008 in a span of 70 minutes, killing 56 and wounding over 200.
26 unexploded bombs were found at different locations in Surat between July 28 and 30. Two cars filled with material required for making explosives and detonators were found parked on the roadside near a hospital and other on the outskirts of Surat.
IM, a home-grown terror outfit, had sent e-mails to TV channels claiming responsibility for the blasts.
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