Three-dimensional transient numerical simulation of coupled gas cavity and geological medium problem resulting from underground nuclear explosion events is complex due to the gas cavity growth, resulting into the large deformations and large strains of the geological medium and shock-induced high strain-rate dependence of the response. However, it is important to establish the effects of local inelastic and nonlinear behaviour due to crushing and cracking of the geological medium, on the shock-waves near the source and the seismic signals beyond the elastic radius. This study also helps simulate the shock-wave reflection effects from the free surface near the ground zero, mound growth, spall near the free surface and the subsequent free fall of the mound due to gravity effect resulting in crater formation. The impacting spalled rock layers give rise to secondary seismic signals in addition to the primary signals that are observed in the near field which in turn are known to influence the far-field seismic signals. The present article describes the capabilities of a three-dimensional transient finite element code, SHOCK-3D, for the short-time cavity growth, shock-wave propagation, mound growth and its free fall along with the settlement of the mound observed after a longer duration for the compo¬site layer medium. The code predictions are bench-marked for the near-source experimental observations of the first Indian nuclear explosion event of 1974, carried out at the Pokhran test site.