The division bench of Justices V M Kanade and P D Kode asked the police to issue an apology to the man, and have it published in leading newspapers in the Union Territories of Diu and Daman.
"Issue the apology and see to it that it is printed on page one of the newspapers," Justice Kanade said.
The court was hearing a petition filed by Hasmukhbhai Patel, seeking quashing of criminal complaint filed against him by Kirtibhai Patel from whom he had borrowed a sum of Rs 21.75 lakh in 2008.
Patel acquired anticipatory bail from sessions court which observed that prima facie it was a civil case.
More From This Section
Despite this, the police arrested Patel and released a press note along with his picture, showing him holding a placard with details such as name, etc.
Patel, who moved the High Court, claimed this was defamatory.
The HC asked him to approach the trial court for discharge from the criminal case, and initiate separate proceedings for defamation against police if he wished.