ISLAMABAD (Reuters) - Pakistan's Supreme Court on Tuesday upheld a lower court's decision to release an Islamist militant who India accuses of masterminding a 2008 assault on Mumbai, dismissing a government appeal.
India has expressed dismay over the decision though analysts say it is unlikely to derail a recent agreement between the leaders of two countries to get talks going to tackle long-running disputes.
Pakistan's central government and a provincial government had challenged the release by a high court last year of Hafiz Mohammad Saeed, founder of the Lashkar-e-Taiba (LeT) militant group.
But the Supreme Court quashed the appeals, saying the government had failed to provide sufficient evidence against Saeed.
"The appeals are dismissed," Justice Nasir-ul-Mulk, head of a three-member panel, said in announcing the decision.
India expressed displeasure.
"There is a sense of disappointment," Foreign Secretary Nirupama Rao told reporters. "We regard Hafiz Mohammad Saeed as one of the masterminds of the Mumbai attacks."
The Pakistani court decision came shortly after the two countries agreed to resume talks that had been frozen by India after the Mumbai attacks, in which 166 people were killed.
Pakistani Prime Minister Yusuf Raza Gilani and his Indian counterpart Manmohan Singh met on the sidelines of a regional conference last month and agreed to get talks going.
"Whereas India will express its resentment ... I don't think it will change the present climate and desire of the two countries to move forward at least on engagement," said Talat Masood, a retired army general and analyst.
India blames the LeT group for the coordinated assault by 10 militants on its financial capital in November 2008.
Indian security forces killed nine of the militants while the 10th, Pakistani national Mohammad Ajmal Kasab, was caught alive. An Indian court sentenced him to death this month.
Pakistan has acknowledged that the Mumbai attack was plotted and partly launched from its soil and has put on trial seven suspects, including a senior commander of the LeT, for their roles in the assault.
But Pakistan says India has not provided sufficient evidence to prosecute Saeed, who also leads an Islamist charity, Jamaat-ud-Dawa.
"The decision of the court has sent a clear message that Jamaat-ud-Dawa and its chief have nothing to do with terrorism," charity spokesman Yahya Mujahid told Reuters.
Saeed co-founded the LeT in the 1990s to join a Muslim insurgency against Indian rule in the disputed Kashmir region.
But he stepped down as head of the group shortly after India accused it and another militant group of an attack on the Indian parliament in December 2001.
Pakistan outlawed the LeT in January 2002.
Pakistan detained Saeed in December 2008 after a U.N. Security Council resolution to put him and Jamaat-ud-Dawa on a list of people and organisations supporting al Qaeda.
But the high court in the eastern city of Lahore released him last year on the grounds of insufficient evidence, prompting the government to appeal to the Supreme Court for his re-arrest.
(Editing by Chris Allbritton)
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