Justice P Ubaid directed Hussain, lodged in the Kakkanad district jail for the past 28 days, not to enter the Palarivattom police station limit in Kochi city until further orders.
He was granted bail as police did not seek his custody when the bail application moved by him came for consideration of the court.
Police did not oppose the bail as the investigation into the case against him was almost completed.
Hussain had surrendered before the Investigating Officer here on November 17 after the court had rejected his anticipatory bail application.
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Poulose had alleged that he was forcibly taken to a place by a gang, where Hussain threatened him with dire consequences over a business deal.
Earlier police had argued that granting bail to Hussain would adversely affect the ongoing probe in the case.
His detention was necessary to conduct further investigation into the case, they had said.
Taking note of the argument, the judge had turned down the bail application.
CPI(M) has removed Hussain from the post of party's Kalamassery Area Secretary. However, he has been retained as member of the party's district committee.