Judge Murchie told the jury to find Kauser Jafri, 21, of Slough, Berkshire, not guilty of murdering Khalid Dad, 21, in May last year. He said that there was no case to answer.
Mr Jafri's brother, Moddessir, 24, and his father Majid Syed, 60, are still charged with the murder. Mr Dad, of Slough, Berkshire, had been gagged, beaten and his head severed by a single blow.
Mr Syed told the court that on the night of the murder he had been attacked by several men in his house. A man held a knife to his throat and threatened to kill his children. 'They told me that if I opened my mouth my children would be dead tomorrow. I was frightened and could not do anything,' he said.
Mr Syed said that his wife and children slept through his two- hour ordeal. 'I did not tell them what had happened because I did not want to frighten them.' He added that weeks before the murder he had received a number of threatening telephone calls.
He repeatedly denied murdering Mr Dad and suggested that his attackers might have killed Mr Dad. 'I think the people responsible for my attack are the influential people, the big people, the people who could get things done,' he said.
Mr Dad's head was found in a gutter in a black plastic bag on 21 May 1991. His body was found in a school driveway half a mile away, wrapped in a bedspread. The prosecution alleges that Mr Dad's blood-stained clothing was found in Mr Syed's loft and 'items used by his executioners'.
Mr Syed said that he did not know how the clothes got into his loft and who they belonged to. 'They are not mine, I have never seen them before,' he said.
Although Mr Syed agreed that blood-stained foam was found in his house, he denied he had used it to soak up Mr Dad's blood. 'I found it after the men had gone, that was the first time I had seen the foam. I just picked it up and placed it under the bed,' he said.
The trial continues today.