The principal, who was arrested on Friday, had been in MIDC police custody till Tuesday.
The incident came to light after the boy told his mother that the principal touched him inappropriately when he was in the school toilet.
The Kheda police has launched a hunt for Sadhu Atmaswami, who is allegedly missing after the complaint was lodged in Naroda in Ahmedabad.
The accused confessed to the sexual assault in his shop and that he had been drunk at the time.
One more sailor, who is currently out of Mumbai, is wanted in the case, and is expected to be arrested soon.
The police arrested the accused from their residences on Friday night after recording the victims’ statements and subjecting them to medical tests.
Bhatt was alone when he called the girls from the class upstairs to his home on the ground floor and began fondling them
School bus operators call off strike after no-FIR assurance, now to meet again and decide.
The school has maintained that it could not be held responsible for the incident of sexual assault.
It looked apparent that the school did not take immediate action when the victim’s parents first reported the matter to the principal.
Manjit Singh, president of Chandigarh School Bus Operators’ Association, said that the proposal to have female staff seemed impractical.
The accused has confessed that he was sexually abusing the child for three days.
While the initial complaint said both girls were raped, medical examination ruled out rape in the case of the 9-year-old, police said.
An accused, in a confession statement to the court in 2003, claimed the officer had tortured him.
The incident has come at a time when the CBI is investigating a slew of MMS clips of girls being sexually exploited.