District and Sessions Judge, Khurda, Durga Prasad Choudhury granted bail to Mohanty in lieu of Rs one lakh and two sureties.
The court also asked Mohanty to cooperate with the central investigating agency which arrested him on September 22 for allegedly abusing his official position and misappropriating funds of Artha Tatwa Group of companies. The sessions and district court took up Mohanty'a bail petition as per the direction of the Orissa High Court.
The judge heard both the sides for about two hours before granting the bail. Mohanty, who had relinquished the position of AG on September 12, was arrested by the CBI from his house in connection with his alleged link with chit fund company CMD and on charge of entering into fraudulent property deal with the latter.
After taking the 70-year-old Mohanty on remand for two days, he was produced before the CBI court on Thursday, which had remanded him to judicial custody after rejecting his bail.
A special investigating team (SIT) of the central investigating agency is currently investigating the multi-crore chit fund scam in Odisha following directions from the Supreme Court.
Mohanty was presently lodged at the special jail in Bhubaneswar and his judicial custody will continue till September 30 after the special chief judicial magistrate's court rejected his bail petition last night. Meanwhile, Orissa High Court Bar Association welcomed the granting of bail to Mohanty.
"We are happy that Mohanty has been granted bail. He was arrested without having solid evidence. Now we will call off the three-day long strike," Bar Association secretary Bidyadhar Pradhan said.