New York ( CNN ) -- 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 . Devyani Khobragade was arrested and strip searched by federal agents in New York City in December after federal authorities accused Khobragade of lying on a visa application about how much she paid her housekeeper . She was indicted on January 9 by a federal grand jury on one count of visa fraud and one count of making false statements . 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 . `` 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 . CNN 's Allison Malloy in New York and Harmeet Singh in New Delhi contributed to this report .
NEW : 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 . The Indian government has said it will not pay for her to leave and that she is free to return home if she wants.