Purohit accepted that he had attended meetings of Abhinav Bharat, a right wing organisation whose members were accused of conspiring in the Malegaon blast, but he had acted as an army officer and passed on the information to his senior officers about group's activities.
A bench of Justices R K Agrawal and A M Sapre reserved its verdict on Purohit's plea seeking interim bail and said it will pass order.
"My client has got himself caught in political crossfire. He has been in jail for nine years but still he is serving in the Indian Army. Since 2001, he has got numerous recommendations for infiltration. From an unsung hero, he has been now called an incarcerated hero," senior advocate Harish Salve, appearing for Purohit, said.
He said that all these facts were shown to the Bombay high court but they say these records were not put against him by prosecution. So why would they look into it, he asked.
"Allegation against me is that I supplied RDX explosive material on the conspiracy hatched by Sadhvi Pragya Thakur. Now, if she is enlarged on bail and given a clean chit by NIA, then the link between me and her is snapped. I am at least entitled for interim bail after undergoing nine years of jail in the case," Salve said.
He said that even after these nine years, no interim relief was granted by the trial court which has said it will look into the chargesheet at the trial stage.
"ATS in its chargesheet says that I attended meetings of Abhinav Bharat. Yes, I attended certain meetings, but as a military mole. I have been doing my duty.
"The court says that it will look into ATS chargesheet at the stage of trial and refuses interim bail even as charges are not framed against me. What kind of criminal justice system is this," Salve said.
He said that charges under the stringent Maharashtra Control of Organised Crime Act were dropped against Purohit by the apex court in 2015, after no evidence was found against him.
"I am not asking for discharge in the case, but all I am saying is that after nine years of incarceration, even after MCOCA has been dropped, give me interim bail. After nine years a man is entitled to see the sun outside jail," Salve said.
He argued that Purohit has been falsely implicated by Maharashtra Anti Terrorist Squad (ATS) and no report has been filed after eight years of Army's Court of Inquiry.
"I asked the court to look into Court of Inquiry records but it said that these are not relied upon and can't go beyond the chargesheet. This is wrong approach in law. In bail, I can show exculpatory evidence but in framing of charges I can't do so," Salve told the bench.
He said that NIA said in its report that many of the witnesses were forced to give statements and it would not rely on any such statement.
"Dubious methods were adopted by the ATS, which become crystal clear with the disappearance of prime witnesses in the case," the senior lawyer said, adding that ATS had no time to collect evidence in the case due to which Purohit was booked under MCOCA and denied bail.
Additional Solicitor General Maninder Singh, appearing for NIA, said although it has been found that Purohit had rightly informed his seniors about the activities of Abhinav Bharat, there were some materials against him which could justify framing of charges against him.
Senior advocate Amrendra Sharan, appearing for one Nisar Ahmed Haji Sayed Bilal, father of one of the blast victims who intervened in the matter, said that Purohit was a 'powerful person' and could influence the witnesses in the case.
"The fact that witnesses are retracting their statements, give credence to the fact that he can influence them and tamper with prosecution evidence if enlarged on bail," Sharan said, adding that the 'the propensity of the accused to tamper with the prosecution witness is very crucial factor to be considered at the time of grant of bail'.
Purohit had moved the apex court challenging the Bombay high court's order dismissing his bail plea.
Seven people were killed in a bomb blast on September 29, 2008, at Malegaon, a communally-sensitive textile town in Nasik district of north Maharashtra.
A special MCOCA court had earlier ruled that the ATS had wrongly applied this law against Thakur, Purohit and nine others.
The 4,000-page charge sheet had alleged that Malegaon was selected as the blast target because of a sizeable Muslim population there. It had named Thakur, Purohit and co-accused, Swami Dayanand Pandey as the key conspirators. However, Thakur was last year given clean chit by the NIA.
It had alleged that it was Pandey who had instructed Purohit to arrange explosive RDX, while Thakur owned the motorcycle which was used in the blast.
Ajay Rahirkar, another accused, allegedly organised funds for the terror act, while conspiracy meetings were held at the Bhonsala Military School in Nasik, it had said.
Rakesh Dhawde, Ramesh Upadhyay, Shyamlal Sahu, Shivnarain Kalsangra, Sudhakar Chaturvedi, Jagdish Mhatre and Sameer Kulkarni were the other accused.
'Sadhvi Pragya has bad destiny'
Who botched up the Malegaon blast investigation?
I'm victim of Chidambaram's 'saffron terrorism' bogey: Sadhvi Pragya
A tale of two 'terrorists' and a cautionary lesson
Malegaon case: 'NIA decision vindication of prosecutor's claim'