A bench of justices Pradeep Nandrajog and Mukta Gupta freed convict Captain Bhagmal on interim bail on condition that he will furnish a bail bond of Rs 50,000 with one surety of the like amount.
The court granted the relief after 86-year-old Bhagmal sought three months interim bail, saying he needs to undergo surgery for "enlarged prostate cancer".
Bhagmal, former MCD councillor Balwan Khokar and Girdhari Lal are the three persons who were awarded life imprisonment by the trial court in May last year.
On April 30, last year, the trial court had, however, acquitted Congress leader Sajjan Kumar in the case. Later his acquittal was challenged by the family members of the victims in the High Court.
The case relates to the murder of five members of a family in Raj Nagar area of Delhi Cantonment on November 1, 1984, a day after the assassination of Indira Gandhi.
The convicts have filed their appeals before the High Court while CBI also filed its appeal demanding death sentence for the trio, saying they were engaged in "a planned communal riot" and "religious cleansing".