The verdict arrives at a time when the centre is being regularly accused by opposition parties of using the CBI to punish political rivals.
Mr Vijayan, 73, a top leader of the CPM, has been accused by the CBI of swindling Kerala of about 375 crores in the 1990s through hiring a Canadian firm, SNC-Lavalin, to repair and upgrade three major hydroelectric projects. At the time, Mr Vijayan was Power Minister in a coalition government anchored by the Left.
The charges of a scam were raised by the next government that was led by the Congress which said the contract had been assigned without any bidding process and was inflated to benefit the Canadian firm.
In 2013, Mr Vijayan was discharged by a CBI court along with six others from the case which said the agency had failed to provide any evidence of his role in the alleged scam.
The CBI then appealed against that verdict and lost its case today.