P Chidambaram, 74, had challenged the Delhi High Court's decision denying him bail. The Supreme Court today criticised the High Court for making observations on the merits of the case and noted that the "triple test" was found in the politician's favour - that he was not absconding, not tampering with evidence and he was cooperating with investigators. The top court, which observed that economic offences are grave in nature, said "grant of bail is rule and refusal is exception".

In the previous hearing, Mr Chidambaram had complained, "the high court denies me bail saying that releasing me will send a wrong signal, as if I am some Ranga Billa," referring to a pair of killers hanged for the kidnapping and murder of two siblings in Delhi in 1982.

Among the first to react was Mr Chidambaram's son, who is also an accused in the case. "Phew, at last after 106 days," tweeted Karti Chidambaram, with a smiley. The BJP's Sambit Patra jibed that Mr Chidambaram had joined the "OOBC (Out On Bail Club)" of the Congress.

Congress leader Rahul Gandhi tweeted: "Mr P Chidambaram's 106-day incarceration was vengeful & vindictive. I'm glad that the SC has granted him bail. I'm confident that he will be able to prove his innocence in a fair trial." Senior Congress leaders including Sonia Gandhi had visited Mr Chidambaram in jail in a show of support. Last month, Rahul Gandhi and Priyanka Gandhi also visited him.

During the arguments, the Enforcement Directorate (ED) had claimed that the former finance minister continues to have "substantial influence" on crucial witnesses in the case even from custody. Mr Chidambaram argued that the agency cannot destroy his career and reputation by making baseless allegations.

Mr Chidambaram was arrested on August 21 by the CBI, which is investigating allegations that as Finance Minister of the country in 2007, Mr Chidambaram facilitated a huge infusion of foreign funds into the company INX Media founded by Peter and Indrani Mukerjea.

The Enforcement Directorate arrested him on October 16 in connection with money-laundering allegations linked to the case. Mr Chidambaram is accused of creating a web of shell companies and several foreign bank accounts to launder money.

At Tihar Jail, Mr Chidambaram was given a separate cell, a western toilet, home-cooked food and medicines, following a Delhi High Court order. He had requested bail to fly to Hyderabad for the treatment of a stomach ailment but was denied it.

Investigating agencies repeatedly opposed his bail arguing that economic offences like money laundering are grave in nature as they affect the nation's economy and also shake people's faith in the system, especially when it is committed by people in power.