Only days after Prime Minister Kevin Rudd's talk with Indonesian President Susilo Bambang Yudhoyono and his announcement to hold a summit against the prevalent people-smuggling trade, the government of Indonesia refused extradition request by Australian government to extradite alleged people smuggler Sayeed Abbas Azad.

South Jakarta District Court decision given on Thursday ends Australia's four-year battle to punish him for the alleged crime he committed.

According to a report from Nine MSN, the decision became a major hurdle for Canberra which aimed to send message to smugglers that they are fighting the illegal trade seriously. As Mr Abbas Azad was freed on Thursday, more and more boat-riding asylum seekers came to the country.

A panel of three judges ruled that Australia's request for extradition failed to meet the requirements of neither Indonesia extradition law nor the Australia-Indonesia extradition agreement. The rule came just in time for Mr Abbas Azad 31st birthday.

The judges also ruled that since Mr Abbas Azad was serving prison time in Indonesia during the period of which Australia accused him of smuggling people, it will be impossible for the accused to be punished under the Australian law.

The Chief judge explained that, "he was in Indonesia's territory and he was in detention and so it was impossible to commit crime as has been charged by the Australian government. The crime that he committed did not happen in the country which requested the extradition."

Mr Abbas Azad was allegedly the most notorious people smuggler wanted in Australia on 27 charges related to boats that were seized by Australia en route to Christmas Island between 2009 and 2011.

When he heard the ruling of the court, Mr Abbas Azad said, "I'm happy because I have won the court decision, I am not a smuggler."

Mr Abbas Azad had always denied accusation of him being smuggler of people. He always upholds that he is a victim of mistaken identity.

He was now being deported to Afghanistan and any future appeal from Australian government remains futile unless the government found fresh charges against him.

Government officials had expressed different concerns and opinions about the ruling on Mr Abbas Azad.

In an interview with The Australian, Opposition immigration spokesman Scott Morrison said that the court's decision on Mr Abbas Azad emphasised the need for the Rudd Government to take decisions on its own national interest.

According to Mr Morison, "We would hope for a good decision from the President, but what this highlights is that Australia must take the action that it must take on its side of the border to stop the people-smuggling trade. We can't just allow the problem to be decided beyond out border."

Refugee advocate Marion Le expressed a much stronger opinion saying that the Jakarta authorities became lenient in its handling of Mr Abbas Azad's case because "it serves Indonesia well."

"Indonesia is increasingly bearing the brunt on their borders of people arriving in their country, and it's not in Indonesia's interest to prevent them leaving."

Refugee Action Coalition spokesman Ian Ritoul said that jakarta's decision strengthen the case of decriminalizing people smuggling, "At the moment the organization of the boats has to be done secretly rather than in the open. There should be a transparent process so the boats could travel safely without the threat of punishment. Australia clearly has the capacity to increase the refugees it looks after. Proportionately we are a long way behind the numbers we used to take in the 1990's."