The three-member Bench heard the case headed by CJP, Iftikhar Muhammad Chaudhry including Justice Chaudhry, Justice Jawad S Khwaja and Justice Khilji Arif.
According to our correspondent, Chief Justice Iftikhar Muhammad Chaudhry announced the verdict and says Gilani has been ineligÂible since April 26 and he is no longer Prime Minister.
The court has also ordered President Asif Ali Zardari to select a new prime minister. The verdict also states that the Election Commission of Pakistan (EC) should issue a notification regarding Gilani’s ineligibility.
Yousuf Raza Gilani is no longer MNA neither the member of parliament and his cabinet has also been ineligible, states the verdict.
In April, the Supreme Court found Gilani guilty of contempt of court for refusing to reopen corruption cases against the president. Gilani's lawyer, Fawad Chaudhry, said only parliament could dismiss the prime minister.
"Since no appeal was filed (against the April 26 conviction) ... therefore Syed Yusuf Raza Gilani stands disqualifed as a member of the Majlis-e-Shoora (parliament)...," said Chief Justice Iftikhar Chaudhry in a packed courtroom.
"He has also ceased to be the prime minister of Pakistan ... the office of the prime minister stands vacant."
Gilani was the first serving prime minister in Pakistan's history to be convicted by a court.
The bench has been hearing a set of petitions filed by the Pakistan Muslim League-Nawaz (PML-N), the Pakistan Tehrik-i-Insaf (PTI), Azhar Chaudhry advocate and others challenging the speaker’s ruling of May 24 over the qualification issue.
