Salem last month filed an application before the court, taking exception to the handcuffing.
"He is not a superhuman," said judge G A Sanap, allowing Salem's plea.
Earlier, the court had questioned the Navi Mumbai police's argument, where they had said they had intelligence reports saying that he could flee.
The court had said that the report on this "important aspect" was not in writing.
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The Supreme Court of Portugal last year dismissed an appeal of the Central Bureau of Investigation (CBI) challenging termination of the extradition of the underworld don.
Salem was shot by gangster Devendra Jagtap alias JD, an accused in the murder of advocate Shahid Azmi who had represented an 26/11 Mumbai attack accused, at Taloja Central Jail in Navi Mumbai on June 27 last year. Salem was hit in the hand by one of the two rounds, allegedly fired by JD.