The Lilongwe Magistrate's Court ruled against the arrest of self-appointed prophet Shepherd Bushiri and his wife Mary, Malawi media reported.
The State made a fresh application seeking a warrant of arrest for the couple, this was after the State withdrew the appeal of the November 20 ruling which was challenging Magistrate Viva Nyimba's ruling to have the Bushiris attend court by way of summons and not arrest.
Radio station Capital FM Malawi reported that Nyimba ruled that no warrant of arrest should be executed against the couple since they need to appear in court upon being summoned.
Nyimba ordered that the formal hearing of the extradition should start on March 8. The State was expected to disclosed all remaining documents to the defence on January 18.
The charismatics preacher and his wife are wanted in South Africa on fraud and money laundering charges related to an investment scheme valued at about US$7million.
The couple were arrested in South Africa but, after being granted bail fled to Malawi claiming they were not safe in South Africa.
As part of their bail they were only allowed to travel within Gauteng and North West until the case was finalised. The couple own a hotel in Rustenburg in North West.
They handed themselves to the police in Malawi after a warrant of arrest was issued by Interpol.
Nyimba released them unconditionally stating that their arrest was unlawful because there was no formal request from South Africa.
The State wanted the couple to be kept in custody for 30 days while waiting for South Africa to made a formal request for the couple to be returned to stand trial.
Director of Public Prosecutions (DPP) in Malawi Steven Kayuni, filed an application in the Lilongwe High Court to appeal Nyimba's ruling, but, withdrew the application after South Africa formally requested the extradition of the couple.
Kayuni told the court on Wednesday that a request from South Africa had been formally served on Malawi and it included charges of theft, fraud, forgery, failing to comply with bail conditions in South Africa.