Pronouncing the verdict in a jam-packed court, Justice C R Kumaraswamy also acquitted AIADMK's chief close aide Sasikala Natarajan and her relatives J Elavarasi and V N Sudhakaran, disowned foster son of Jayalalithaa.
As the court proceedings got underway sharp at 11 AM, the judge straightway read out the operative part of the verdict on the appeals filed by Jayalalithaa and three others challenging their conviction by the trial court.
Celebrations also broke out across Tamil Nadu with bursting of crackers and breaking of coconuts on Jayalalithaa's acquittal.
The Karnataka High Court judgement came on an appeal against the judgement of the Special Court Judge John Michael D'Cunha who had on September 27 last year held the AIADMK supremo and three others guilty of corruption and awarded four years jail term, due to which she attracted disqualification as an MLA.
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The judge had also slapped a fine of Rs 100 crore on her and Rs 10 crore each on three other convicts.
The judgement comes as a major boost to Jayalalithaa and the AIADMK exactly one year ahead of Assembly elections in Tamil Nadu.