A bench of Justices S Muralidhar and I S Mehta set aside the trial court's August 2015 decision convicting the man for murder and awarding him life imprisonment.
The high court's order came on the man's appeal against the trial court's decision.
The bench said that certain circumstances of the case, like the "ghastly manner" in which the woman was killed, which was evident from 24 injuries on the woman's body caused by several household articles, were perhaps "reflective of his chronic mental state".
The bench said that even the medical professionals of the Tihar Jail had confirmed that he continued to suffer from bi-polar disorder, which is associated with mood swings that range from acute depression to manic behaviour.
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It also noted that the appellant was suffering from chronic depression for a long time and was receiving treatment from 2007 onwards and had also attempted suicide a month prior to committing the offence.
"While one might never know what his precise frame of mind on the fateful day was, it is fairly evident that he was suffering from chronic depression throughout," it said.
While ordering that he be released from jail, the high court directed that he should continue to undergo treatment for his medical condition till the time the doctors feel it is necessary.
The incident had occurred on the intervening night of June 20-21, 2011, police had said.
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