The special court for Terrorist and Disruptive Activities (Prevention) Act (TADA) cases last month convicted Merchant, extradited gangster Abu Salem and four others in the case.
The defence lawyers today began their arguments on the quantum of sentence.
The TADA court judge G A Sanap, while convicting Merchant, had held that he was one of the conspirators. The CBI has sought death penalty for him.
Merchant's lawyer Sudeep Passbola said his client did not attend the conspiracy meetings which preceded the March 1993 blasts and there was no evidence to show that he was aware of RDX being smuggled into the city.
Among other things, Merchant was accused of sending people to Pakistan for arms training.
Passbola also refuted the CBI's claim that Merchant had good relations with Pakistani Army and the country's intelligence agency, ISI.
He was acting at somebody else's instructions and was not "in commanding position", the lawyer said.
Meanwhile, the court issued a notice to Delhi police today, seeking their reply, as the case for which they are seeking the custody of Abu Salem is not covered by the extradition agreement between Portugal and India.
Delhi police have approached the court seeking Salem's custody for a case registered in the national capital.
However, as per the agreement with Portugal under which Salem was extradited in 2005, he can be tried in only nine cases (including the 1993 blasts case).
The Delhi case is not a part of the list.
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