The wheel-chair bound English lecturer was arrested by the Maharashtra police in May, 2014 for his alleged links with top leaders of the banned Communist Party of India (Maoist) and lodged in Nagpur central prison for over a year.
His worsening health condition was the main ground for his release, officials said.
"We are satisfied that if Saibaba is not released on temporary bail for medical treatment, then there is a chance that his life will be at risk. This court would be failing in its duty to protect the fundamental right of Saibaba," a division bench of Chief Justice Mohit Shah and Justice S B Shukre had said earlier.
However, the court had asked him to furnish a personal bond of Rs 50,000 to walk out of the Nagpur central prison.
While granting him temporary bail for three months, a division bench of the Bombay High Court, comprising Chief Justice Mohit Shah and Justice S B Shukre had said that if he was not released on bail for medical treatment and supportive care, he could face a risk to his life.
The Bombay High Court had taken suo moto (on its own) cognisance of the matter after a news report on Saibaba's health condition appeared and a letter written by activist Purnima Upadhyay to the court.