Syed Mohammad Kazmi, a freelance journalist who worked for Iran´s IRNA news agency, is accused of helping a group of Iranians organise an attack in which a magnetic bomb was attached to an Israeli embassy car.[break]
Israeli diplomat Tal Yehoshua Koren, the wife of the embassy´s defence attache, was badly wounded in the blast. Israel immediately blamed Iran for the attack which came only a few days after a similar attack in Thailand.
Delhi police arrested Kazmi in March after raiding his residence.
"The Supreme Court has granted bail to Kazmi. He has to surrender his passport and there are no other restrictions on him," Kazmi´s lawyer Mehmood Pracha told reporters outside the courtroom.
Kazmi is the only person to be charged in India in connection with the bombing. His bail plea was earlier rejected by two lower courts, prompting the family to appeal to the country´s highest court.
"The police has no concrete evidence in the case. They arrested my father to show the international community that they have acted swiftly," Kazmi´s son Shauzab told reporters.
"He has been targeted because he works for an Iranian company."
The main plotters were believed by police to have entered India on tourist visas and left after the attack. In March, Interpol issued wanted notices for four Iranians suspected of involvement in the attack.
Analysts have suggested that the attack was retaliation for a series of car bombings targeting Iranian nuclear scientists which have been blamed on the Israeli secret service Mossad.