A division bench comprising Justices V N Sinha and A K Lal passed the order on the appeals filed by the convicted persons.
Absolving the 26 convicts of all charges for lack of evidence against them in the case, the bench directed their immediate release.
"We are of the view that the prosecution witnesses are not reliable...So, all convicted persons are entitled to the benefit of doubt," they said.
Suspected men owing allegiance to outlawed upper caste militia Ranveer Sena had allegedly massacred 58 Dalits at Laxmanpur Bathe on December 1, 1997.
In 2010, Additional District Judge Vijay Prakash Mishra had convicted 26 persons and awarded death sentence to 16 of them and life sentence to the remaining 10 after finding them guilty.
The convicted persons had subsequently filed appeals in the Patna High Court challenging the order.
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