Kanojia's wife Jagisha Arora moved the apex court on Monday challenging her husband's arrest.
A vacation bench comprising Justices Indira Banerjee and Ajay Rastogi said: "We disapprove deprivation of liberty of the journalist by the state's action to arrest him."
The court asked the Uttar Pradesh government to show its magnimity and the principle of forgiveness, and pulled up the state counsel saying he cannot defend prosecution by sitting behind the bars in this particular case.
"We live in a country which has a Constitution, and it is one of the best in the world," said the court, rubbishing Uttar Pradesh state counsel arguments justifying Kanojia's arrest.
The counsel argued that Kanojia, through his social media posts, has infringed on somebody's right, but the court rebutted that it cannot be justified by putting a person behind the bars.
"The question is that he is behind the bars... and we disapprove of any act leading to deprivation of liberty," observed the court.
The court said: "We direct that petitioner be immediately released on bail on conditions put by the trial court. It is also to be clear that this order should not be construed as an approval of his tweets/posts on social media... We do not appreciate harsh action."
Kanojia was picked up by the Uttar Pradesh Police from Delhi on Saturday, his family members said. Though, his formal arrest was shown from Lucknow.
Reportedly, the Uttar Pradesh Police took the action suo motu in this case.
Kanojia's wife challenged the action of the police in the apex court and has sought issuance of Habeas Corpus.
The court noted that liberty of a citizen is sacrosanct and non-negotiable, as it is guaranteed by the Constitution and it cannot be infringed.
Terming the arrest of Kanojia a glaring example, the apex court rapped the state counsel that it expects the person under arrest to seek relief from trial court and the high court concerned, but not the top court.
The petition claims some people in civil dress picked up Kanojia and allegedly did not produce any warrant of arrest. The petitioner alleged that the Uttar Pradesh Police did not seek transit remand from any Delhi court, but went ahead with the formal arrest in Lucknow.
Advocate Nithya Ramakrishnan mentioned the matter before a bench of Justices Indira Banerjee and Ajay Rastogi on behalf of Jageesha Arora and had sought urgent hearing terming the arrest "illegal and unconstitutional".
The top court had agreed to hear the plea on Tuesday.
The Uttar Pradesh Police had registered an FIR on June 7 at Hazratganj police station in Lucknow under various provisions of the IPC and the Information Technology Act.
Kanojia made satirical comments on Adityanath purely based on the alleged claim of a woman that she was in regular touch with the Chief Minister via video conferencing.
The court also pulled-up the journalist for posting and sharing objectionable statements and posts on social media, and said that state is allowed to go ahead with the investigation against him and conduct trial.
( With inputs from IANS )