Story highlights India welcomes the ruling

Devyani Khobragade was accused of lying on a visa application

That search sparked outrage in India, with officials there demanding an apology

Khobragade had diplomatic immunity, so the charges can't stand, judge finds

The Indian diplomat whose arrest sparked a testy exchange between the United States and India won a dismissal of a federal indictment Monday, according to court documents.

Khobragade then filed a motion to dismiss the charges, claiming she was "cloaked in diplomatic immunity at the time of her arrest," according to the motion.

The court agreed, stating that Khobragade was "appointed a Counselor to the Permanent Mission of India to the United Nations, a position that cloaked her with full diplomatic immunity," according to court documents. She was appointed to that position on January 8, a day before she was indicted.

"Even if Khobragade had no immunity at the time of her arrest and has none now, her acquisition of immunity during the pendency of proceedings mandates dismissal," U.S. District Judge Shira Scheindlin wrote.

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"The government may not proceed on an indictment obtained when Khobragade was immune from the jurisdiction of the court," Scheindlin continued.

Khobragade's attorney, Daniel Arshack, said in a statement that Khobragade is pleased that "the rule of law has prevailed."

"We are heartened that the court agreed with our legal analysis and rejected the prosecution's arguments by dismissing the case," he said.

India's external affairs spokesman, Syed Akbaruddin, issued a statement welcoming the ruling.

James Margolin, spokesman for the United States Attorney's Office for the Southern District of New York, did not rule out the possibility of further charges.

"As the court indicated in its decision, and as Devyani Khobragade has conceded, there is currently no bar to a new indictment against her for her alleged criminal conduct, and we intend to proceed accordingly," he said in a statement.

Khobragade, who left the United States in January, is now working for the Indian Ministry of External Affairs in Delhi.

Her case drew international attention, with Indian officials demanding apologies from Washington, and the United States announcing it would withdraw one official from its embassy in New Delhi.