The ruling, by a lone Canadian judge sitting without a jury in Vancouver, marked the collapse of a two-decade- long investigation.

Air India’s Flight 182 plunged into the ocean off the coast of Ireland en route to Heathrow from Vancouver and Montreal.

The acquittal of Ripadaman Singh Malik, 53, a self-made millionaire, and Ajaib Singh Bagri, 55, a rural millworker, drew gasps and wailing from the dozens of victims’ relatives who had packed into the blast-resistant courtroom. The trial has cost C$100 million (£43 million).

Justice Ian Bruce Josephson, of the Supreme Court of British Columbia, rejected confessions allegedly made by prosecution witnesses. “The Crown has not proven its case against him beyond a reasonable doubt,” he said.

Speaking about Mr Bagri, he added that “the evidence has fallen remarkably short . . . I find the Crown has not proved his guilt beyond a reasonable doubt”.

The two defendants were immediately removed from the courtroom.

The decision followed an investigation into Canada’s biggest mass murder and a 19-month trial, which was adjourned in December.

Prosecutors blamed the bombing on a Sikh militant group called Babbar Khalsa, which it said was intent on avenging India’s 1984 raid on the Golden Temple in Amritsar, the Sikhs’ holiest shrine, in which hundreds died.

It said that the group’s ultimate goal was the creation of an independent Sikh state, called Khalistan, in northwest India.

Indira Gandhi, the Indian Prime Minister, was assassinated by her Sikh bodyguards on October 30, 1984, in retaliation for the Amritsar raid.

The Crown presented evidence that the Sikh group had built suitcase bombs on Vancouver Island, bought air tickets, then planted the explosives aboard two flights from Vancouver that connected with Air India planes.

Mr Malik and Mr Bagri were charged with eight counts of murder and conspiracy for planting the two bombs, which went off within an hour of each other on on June 23, 1985.

The first killed two baggage handlers at Narita airport in Tokyo as it was being transferred to Air India Flight 201. The second bomb exploded 54 minutes later on board Air India Flight 182, a Boeing 747 named The Emperor Kanishka as it cruised at 31,000 feet. Some of the passengers apparently survived the explosion only to perish in the Atlantic.

Just before the trial began in 2003 a third man, Inderjit Singh Reyat, who was already serving a ten-year sentence for the Tokyo airport bomb, pleaded guilty to manslaughter and was sentenced to five years in jail.

The man whom investigators had suspected of masterminding the plot, Tarwinder Singh Parma, who was also an immigrant to Canada, died in a police shoot-out in India in 1992.

Key evidence was provided by witnesses who could not be named because they were in government protection programmes for fear of retaliation by Sikh extremists. The Government’s star witness was a woman who taught at a primary school run by Malik for Sikh children, who said that the two had been in love.

“He [said], ‘We had Air India crash. Nobody, I mean nobody, can do anything. It is all for Sikhism’,” she alleged that Malik had told her in April 1986.

She testified that in 1997 he confessed that he was the one who had bought two tickets to fly the bombs out of Vancouver in order to make connections with Air India flights in Toronto and Tokyo.

The woman said that she did not want to turn on Malik, but that she had been forced to because his partners had convinced him that she was a spy and had to be fired.

Canadian prosecutors have not decided if they will appeal the verdict. They have 30 days to decide.

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