The Patna High Court on Wednesday acquitted all the eight people accused in the 13-year-old alleged fake police encounter case in Ashiana Nagar in which three students were killed.

The court acquitted them citing lack of evidence thereby giving them a benefit of doubt. While hearing a bunch of petitions filed by the accused, the division bench of Justice V.N. Sinha and Justice Jitendra Mohan Sharma pronounced the order.

Justice Sinha, while pronouncing the judgment, said: "There was insufficient evidence against them (the accused) in the chargesheet filed by the police." Those acquitted include then station house officer (SHO) of Shastri Nagar, Shamse Alam, who was earlier sentenced to death by a fast-track court in June 2014.

The fast-track court had awarded life imprisonment to seven other accused connected with the case, including constable Arun Kumar Singh. The court on Wednesday directed the state government to pay a compensation of Rs 10 lakh each to the family members of the three young men killed in the encounter.

A senior IPS officer posted with the state headquarters called the HC judgment "shocking". He added: "We have to read the order before deciding to go to the Supreme Court."

The case dates back to December 28, 2002, when three students - Vikas Ranjan, Prashant and Himanshu Yadav - were allegedly beaten up by some shopkeepers at Sammelan market in Ashiana Nagar following an altercation with a phone booth operator over payment against calls.

According to the prosecution, Vikas had an argument with a telephone booth owner Kamlesh Kumar Gautam. Vikas left the place and returned with friends Prashant and Himanshu - ostensibly to settle the dispute. However, Kamlesh and five other traders caught hold of the three and beat them up before handing them over to the cops.

The prosecution had alleged that Shamse Alam, who arrived with his team, shot dead the three students and later filed a report describing them as "dacoits". The police had claimed that the three were members of a notorious Ashok Natwa gang and had gone to the market with criminal intentions.

In June 2014, CBI fast-track court judge Ravi Shankar Sinha sentenced Alam to death, while giving life terms to seven others - Kamlesh Kumar Gautam, Raju Ranjan, Soni Rajak, Kumod Kumar, Rakesh Kumar Mishra, Anil Kumar and Arun Kumar Singh.

Under pressure from the Opposition parties, the case was eventually handed over to the CBI. The CBI probe found a case of fake encounter and submitted a chargesheet against Alam and constable Singh, along with six shopkeepers.

The CBI probe found Vikas wasn't a criminal as the police alleged but a BSc student of electronics at AN College-Patna. He also had a diploma in hardware engineering. His friends Prashant and Himanshu were students of RPS College in the city. While Vikas lived in Ashiana Nagar, Prashant and Himanshu were from Patna City and Madhepura respectively.