The court of Principal District and Sessions Judge Bandipora convicted Ghulam Hassan Waloo, Ghulam Ali Waloo and Sikander Waloo on the charges of murdering Nisar Ahmad Shama in 2006.
The trio were awarded life imprisonment and a fine of Rs 15,000 each.
"I am of the considered opinion that the case of the convicts is not the rarest of the rare case where the convict should forfeit his right to life because no case for awarding capital punishment is made out," Judge Mohammad Ali Khan said in his 60-page judgement.
According to the prosecution, the accused persons were in debt of the deceased and persistently harassed him and were trying to usurp the amount of Rs 98,000.
With the intention of eliminating Shama, the accused called him to their house and beheaded him with a sword and threw his body in nearby field.