ISLAMABAD, Pakistan - A Pakistani court yesterday ordered the immediate release of the founder of a banned extremist group, Lashkar-e-Taiba, that is believed to be behind last year's attacks in Mumbai, a decision likely to heighten tensions with rival India.

India denounced the decision, saying it demonstrated that Pakistan was not serious about cracking down on homegrown radical Islamic groups.

The decision came just six months after Pakistan placed Hafiz Saeed, founder of Lashkar, under house arrest. Lashkar is suspected of masterminding the November siege in Mumbai, which left more than 160 people dead.

Saeed's lawyer said the Lahore High Court had ruled there was insufficient evidence to keep holding him. The government could appeal the decision, though it was unclear whether it would.

Outside court, the decision was greeted by cheers and chants of "God is great!" from Saeed's supporters.

In India, officials expressed deep displeasure. "We are unhappy that Pakistan does not show the degree of seriousness and commitment that it should to bring to justice perpetrators of the Mumbai terror attack," Indian home minister P. Chidambaram said.

Analysts on Indian television stations slammed the move, saying it was typical of Pakistani "catch and release" programs for terrorists.

Saeed, 59, is the leader of Jamaat-ud-Dawa, a group that he says is a charity but that the United Nations considers a front for Lashkar.

Pakistan banned Jamaat late last year, under heavy international pressure. It has lately reemerged under yet another name, Falah-i-Insaniat, and has been providing assistance to some of the three million Pakistanis displaced by the army's battle with the Taliban in the Swat Valley.

Lashkar was founded by Saeed and others in the late 1980s, with heavy assistance from the Pakistani military and intelligence services. Its original mission was to battle Indian rule in the disputed Himalayan region of Kashmir, but in recent years it has developed close ties with al-Qaeda and taken up the cause of transnational, radical Islam.

Saeed had not been publicly charged with any crime, and it is unclear what evidence Pakistani investigators had that linked him personally to the Mumbai attacks.

"The judicial verdict is a victory of justice and law," Saeed told the TV channel Geo News from his home near Lahore. He blamed the government for inaccurately linking his group to al-Qaeda, and denied he had ever been in touch with the sole surviving Mumbai gunman.

India insists the record is clear. Saeed, Lashkar, and Jamaat "have a long and well-established background of planning and launching terrorist acts against India," its foreign ministry said in a statement.

The release came as Pakistani troops continued battling Taliban forces in the Swat Valley. The military said that it had killed 21 more insurgents in Swat in the previous 24 hours and that three soldiers had been killed.

The fighting has forced three million people to flee homes in Swat and in the adjacent districts of Dir and Buner. U.S. special envoy Richard Holbrooke is expected to travel to Pakistan starting today and plans to focus on the issue of the displaced families.

Also yesterday, the Pakistani army's chief spokesman, Maj. Gen. Athar Abbas, said the military freed 71 Razmak Cadet College students and nine staff members yesterday after a clash with armed abductors who had taken them Monday. The army intercepted the kidnappers while they were taking the children from North Waziristan, in the country's tribal area, toward South Waziristan, stronghold of the Pakistani Taliban and al-Qaeda.

McClatchy Newspapers said at least 46 schoolboys reportedly remained in the custody of extremists yesterday.