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Naidoo, 45, is out on R250 000 bail pending his appeal, on new evidence, against the conviction and the two life term sentences imposed on him for the murders of Patricia Pillay and her 9-year-old granddaughter, Yetska, a Sapa correspondent reported.
They were killed in their sleep in Valencia, outside Mbombela, on 23 December 2006.
"My client was framed by the other accused, Mohamed Khan, who conspired with another man called Sydney Pandaram, who had a vendetta against him," Naidoo's lawyer Mike Hellens told the court.
Hellens said there was new evidence about a phone call Khan made to Pandaram in 2009, three years after the bombing.
"It is my application that Pandaram conspired with him to frame Naidoo," he said.
He said Pandaram had a vendetta against Naidoo because he believed Naidoo was behind a robbery at his house.
Another witness would testify that around 2006, he was asked to blow up a man called Joe Hlophe, who was linked to the robbery at Pandaram's house, and who was also linked Naidoo.
Hellens said the witness would testify he was promised R100 000, but that he did not carry out the request.
He accused Pandaram of lying often in court, including about Khan showing him an article about the bombing on the front page of the Sunday Times.
"The article was never in the Sunday Times. It was on page three of The Post," Hellens said.
He said Khan was a single witness who was not trustworthy and was inaccurate, and there was also evidence that Naidoo was not with Mohamed Khan or a second co-accused, Zamuk Khan, on 21 December to plan the attack.
"Evidence by Mohamed revealed Naidoo conspired with them on 21 December. There is evidence and invoices of my client being at a Christmas party on that day," Hellens said.
"There is evidence and also an affidavit from a business owner and receipts for liquor that my client bought for that party."
The issue of the party was not brought before court during trial, as the defence was not given the opportunity to raise issues about the Christmas party.
New evidence
Judge Ronel Tolmay said it was of grave concern if Mohamed Khan was not a credible witness, but the new evidence was circumstantial and would not persuade the court to change the conviction. She asked for a written report on the new evidence.
"In the interests of justice, I should give the accused a chance to present evidence before court before I reach a judgement."
The application continues on Tuesday.
Both Khans are serving life sentences and an additional 20 years each for the hand grenade attack on the Pillay family.
The Pillays were suspected of harbouring Naidoo’s girlfriend and child who had run away from him, but the court heard that the Pillays did not know the woman and child.
Naidoo handed himself to the Durban organised crime unit on 7 June 2011.
He was also found guilty on four other charges and was sentenced to seven years each for the possession of explosives, and conspiracy to commit murder.
Naidoo also received eight years each for the attempted murder of Patricia Pillay's children Daphne and Kevin, who were in the house and were injured during the attack.
All the sentences run concurrently.
