Mankikar, who worked for fugitive jeweller Nirav Modi, moved the court claiming that her arrest by the CBI on February 20 was illegal as she was taken into custody at 10 pm.
The law does not allow police or any other probe agency to arrest a woman after sunset.
Vacation bench of Justices J Kathawala and Bharati Dangre accepted her contentions and quashed her arrest and the subsequent remand in judicial custody.
The bench also imposed a fine of Rs 50,000 on the CBI for its "flagrant violation" of rules and suggested that a disciplinary action be initiated against the erring officers.
It, however, clarified that if the CBI's probe called for Mankikar's arrest, the agency was free to arrest her afresh by following the due process of law.
"It is an obligation upon the state to ensure that there is no infringement of a citizen's right to life and liberty. The Code of Criminal Procedure which outlines the manner and to the extent to which a person can be denuded of his liberty, hence, needs a strict compliance," the bench said.
The CBI's action was "in violation and utter disregard to section 46(4) of Code of Criminal Procedure," it said.
Mankikar was Nirav Modi's executive assistant and authorised signatory for three of his group firms Diamond R US, Stellar Diamond and Solar Exports. As per the CBI, Mankikar signed the applications for issuance of allegedly fraudulent Letters of Understanding (LOUs) from the PNB.
The CBI has registered a case against Nirav Modi, his uncle Mehul Choksi, the owner of Gitanjali Gems, and several others including PNB officials for duping the bank of over USD 2 billion by obtaining LOUs fraudulently.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)