Prosecutors have come under fire for their failure to secure the extradition of a convicted British sex offender wanted for 16 years as an alleged member of a foreign paedophile ring abusing Indian orphans.

Raymond Varley, 66, a teacher from Halifax, is accused of making repeated trips to Goa during the 1980s and early 1990s to abuse children by paying the head of an orphanage where more than 150 boys and girls were sadistically abused and tortured.

Mr Varley won his battle against extradition last month after a judge ruled that he was suffering from dementia, based on a report by his neuropsychologist, and that it was “unjust” and “oppressive” to return him to India for trial.

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The Indian authorities are understood to be angry that the Crown Prosecution Service failed to heed their request to commission their own expert to counter the claims after the issue only emerged late in the two-year extradition battle.

“Successive home secretaries have failed to set up a unit dealing with international sex offending and we don’t have any specialist prosecutors,” said Christine Beddoe, a children’s rights campaigner. “Questions need to be asked why the CPS did not request an independent psychiatric assessment when they had the opportunity to do so.”

An arrest warrant for Mr Varley was issued in 1996 by the Indian authorities, but he was never caught after regularly moving home between Thailand, Slovenia, Mexico and Britain. He was finally run to ground in Bangkok where authorities revoked his visa and sent him back to the UK.

He had previously served time in prison until the mid-1980s and was given treatment at Wormwood Scrubs to deal with his sexual offending. Mr Varley claimed to have been a changed man and said that he left the country because of the public reaction to the nature of his crimes.

Widespread abuse linked to the orphanage in Goa was revealed in 1991 after police raided the flat of an Anglo-German social worker for the Catholic Church, Dr Freddie Peats, and found 2,305 obscene images. They included one showing a six-year-old boy blindfolded and strapped to the wall with drugs being pumped into his testicles.

Children identified one of the foreign abusers as “Raymond from Thailand”, according to court documents. Mr Varley was identified from photographs and his passport details at a nearby hotel where he stayed, according to Indian police.

Among the allegations against Mr Varley are that he abused two boys aged five and seven and that he photographed them in the nude, according to Indian authorities. However Mr Varley – who changed his name to Martin Ashley in 2000 – was not arrested until May 2012 in his hometown of Halifax, West Yorks.

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“I have had no involvement whatsoever with abusing children in India,” he said in a statement of his defence. “I have had no involvement in child sex offences since my last conviction in the 1980s.”

Dr Peats was jailed for life for in 1996 while two foreigners, an Australian and a New Zealander, were extradited to India and were sentenced to 10 and seven years behind bars.

As part of his defence, Mr Varley’s legal team sent the former chief inspector of prisons Lord Ramsbotham to India to examine conditions – but he concluded that his human rights would not be breached.

Mr Varley had claimed to have bad knees, high blood pressure and severe depression. “Should I be sent to India, I would have no alternative but to commit suicide,” he said in his defence statement.

District Judge Quentin Purdy said that Mr Varley was a “vulnerable individual” due to dementia and should not be extradited. The Indian authorities appealed the decision and a hearing will be heard later this month.

A spokeswoman for India’s Central Bureau of Investigation said: “A CBI team is presently in London to actively assist the Crown Prosecution Service. The CBI is closely monitoring progress of the case with the active cooperation of the Indian High Commission.”

“The accused Raymond Varley has committed grave offences against young minor children in India, which continues to generate widespread public outrage. The CBI is strongly committed to pursuing the case for extradition of accused Raymond Varley.

“Since the matter is sub judice, CBI would not like to comment on the specifics of the case.”

A CPS spokesperson said: “The CPS, on behalf of the Government of India, has appealed the District Judge’s decision to discharge Mr Varley. The defence evidence regarding dementia was challenged robustly at the extradition hearing.”

Mr Varley’s solicitor did not return calls for comment.