"It is hereby declared illegal," said Moazzem Husain, the chief judge of a High Court panel hearing the case amid tight security outside the courthouse here.
"By majority, rule is made absolute and registration given to Jamaat by the Election Commission is declared illegal and void," Justice Husain said.
The verdict will prevent the Islamist party from contesting the forthcoming parliament election due end of this year or early next.
Bangladesh Tariqat Federation's Secretary General Rezaul Haque Chandpuri and 24 others had filed the writ petition on January 25, 2009. Tariqat is a group that preaches Sufi philosophy and promotes secularism.
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In the petition, they said Jamaat-e-Islami was a religion-based political party and it did not believe in independence and sovereignty of Bangladesh.
The Tariqat Federation claimed in the petition that the Representation of People Order (RPO) law does not allow the registration of a communal outfit as a political party.
Police and elite anti-crime Rapid Action Battalion (RAB) men enforced a strict vigil around the court complex as tensions mounted ahead of the verdict while officials said they also kept prepared extra forces to face any law and order situation.
But no street protest was staged by Jamaat, a crucial ally of main opposition Bangladesh Nationalist Party (BNP) headed by former Prime Minister Khaleda Zia.