Bijaya Sanaseth spent over ten years behind bars after being held responsible – alongside six others believers – for the death of the highly revered social leader.
Although initial media reports said that the Communist Party of India (Maoist) were behind the killing, many Hindu nationalists accused the Christians of perpetrating the murder.
The murder sparked the country's worst ever anti-Christian violence in India's independent history. After three months of violence, at least 91 Christians were killed, many hacked to death by axes and machetes, and at least three Christian women were gang raped.
Sanaseth is the second of the accused Christians to be released after Garanath Challanseth, who was released on bail this year on 21st May.
Bhaskar Sunamajhi, Buddhadev Nayak, Durjo Sunamajhi, Sanatan Badamajhl and Munda Badamajhl all remain in jail.
John Dayal, a civil rights activist and writer, said in a statement: "Any freedom loving human will rejoice that this man can breathe free after more than ten years of unjust incarceration.
"Five others remain in jail, denied this right under the law. We are with them in solidarity. But it needs be remembered that the two [Bijaya Sanaseth and Garanath Challanseth] are out on bail.
"The High Court must hear the appeals and throw out the shameful ruling of the lower court, which reeks of religious bigotry."
Christian Solidarity Worldwide's Chief Executive Mervyn Thomas welcomed the most recent release and added: "We urge the judiciary to expedite the cases of the five remaining accused and see to it that the real perpetrators of the crimes which took place in Kandhamal are held to account.
"There remains a need for the authorities to ensure legal reforms to address the given the impunity that surrounds mass crimes perpetrated in India on the grounds of religion or belief."
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