Additional Sessions Judge V S Kulkarni directed them not to leave the state and tamper with evidence or influence the witnesses, while granting them bail on a personal bond of Rs 15,000 each.
CBI had arrested Andhalkar on April 6 this year while Kauthale was arrested five days later.
They were charged under sections 120 (B) (criminal conspiracy), 192 (fabricating false evidence), 201 (causing disappearance of evidence to screen the offender) and 218 (public servant framing incorrect to save person from punishment) of IPC.
Shetty, who had unearthed some land scams in Pune district through RTI, was murdered by unidentified assailants in Talegaon Dabhade town in the district on January 13, 2010.
CBI had earlier closed the case, saying it could not find any prosecutable evidence, but reopened it later in the light of new evidence found during searches in Pune and Mumbai.
Sandeep Shetty, brother of the slain activist, alleged that "it is clear that CBI has no intention to solve the case and the arrest of two former cops was just eyewash".
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