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He was taken into custody in December last year after speaking out against the United States-led war in Afghanistan.
The law allows the government to hold detainees without charge for there months. The detention period expired on Friday.
After the court decision, police transferred the Islamic leader to a heavily guarded guesthouse in Rawalpindi.
In another ruling, the court extended for three months the detention of Maulana Azam Tariq, the head of banned Sunni group Sipaha-e-Sahaba.
Agencies
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