The officer, who took on Gujarat Chief Minister Narendra Modi, was granted the bail after 18 days.
Sessions Judge V K Vyas granted bail on the condition that Bhatt would cooperate with the investigation and would remain present when called for.
Reacting to the development, Bhatt's lawyer IH Saiyed said termed it as a great relief, expressing hope the officer would be out of the jail in a couple of hours.
The wife of the suspended officer, Shweta Bhatt, said, "I am relieved. I just want to see him today."
Bhatt was arrested on charges of forcing his subordinate, K D Pant, to file a false affidavit against Gujarat Chief Minister Narendra Modi, implicating him in the 2002 riots.
Bhatt was lodged in the Sabarmati jail.
His arrest was made on an affidavit by Pant, alleging that he was forced to stand as an alibi for the incidents that happened on the night on February 27, 2002 at the CM's residence, a day before the communal flare up in Gujarat.
Bhatt had, however, refused to comment on it saying, "I cannot say anything right now as I am in police custody. It is not the right time. If I want I can say lot of things but would not like to comment. It is now for media to decide what is right and what is wrong."
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