Allowing the discharge petition of Vijayan and five others, Judge R Raghu said the charges levelled against them were groundless since the prosecution had failed to establish fraudulent intention, abuse of power and element of cheating attributed against them.
"I have no hesitation in holding that charges levelled against the accused are groundless and all accused are entitled to be discharged," the judge said.
The case surfaced after CAG reported that the state exchequer had suffered a loss of Rs 374.50 crore and also a promised amount of Rs 92.3 crore to the Malabar Cancer Centre did not materialise.
While Vijayan and five other accused, including a former Additional Chief Secretary and the then power board chairman, sought to be discharged from the case, a top Lavalin executive who figured as an accused, has refrained from responding to summons so far.
The CPI(M) leader said he had withstood and survived unscathed mainly due to his firm conviction that he had not committed any error and also due to unstinted support extended by his party.
Observers said the verdict would enable Vijayan become more powerful in the party and emerge as the central figure of the LDF in the next assembly elections.
Apart from rival political parties, Vijayan had often faced digs from his bete noire in his own party V S Achuthanandan, despite the central leadership's stand that this was a politically motivated case.