Nepal Trust on verge of losing Rs50 million over Kathmandu Plaza rowCompany that rented the building for 27 years claims trust didn’t agree to extend the lease even when it offered to hike the rent.
Nepal Trust faces the risk of losing over Rs50 million as its attempt to rent out its the Kathmandu-based property—Kathmandu Plaza—to Kathmandu Metropolitan City failed to materialise.
After its 27-year lease agreement with the Concept Developers Private Limited, the company that built the Kathmandu Plaza Building, expired in June last year, the trust was preparing to rent the building out to the metropolis for a monthly fee of Rs6.05 million.
The amount is almost 10 times more than the rent Concept Developers had been paying the trust. Before the lease agreement expired, the private company was paying the trust Rs625,000 per month.
When the Cabinet decided to allow the trust to rent out the property to the municipal authority last year, Concept Developers moved the Supreme Court demanding that the lease agreement be extended as per the amended Nepal Trust Act-2007. It also sought an interim order to stop the trust from leasing out the property to the city office.
Meanwhile, shopkeepers who rented space at Kathmandu Plaza and Subhas Raj Kafle, a person formally associated with Concept Developers, filed separate writ petitions at the Patan High Court demanding a halt to the lease process with the Metropolitan City.
After the High Court also issued an interim order in favour of the petitioners, the trust failed to expedite the process to rent out the building to the city government.
Following the orders from the two courts, the trust and the Metropolitan City could not sign the planned lease agreement.
“As a result, the trust has not received any rent from the property of Kathmandu Plaza since the lease agreement with the Concept Developers expired,” said Bhisma Kumar Bhusal, spokesperson for the trust. Had the plan to rent out the property to the Metropolitan City materialised, the trust would have earned nearly Rs55 million by now.
Now, the trust neither gets any rent from the Concept Developers nor from the city government as it hasn’t signed an agreement with the trust.
“Even though owners of the shops and offices requested us to make arrangements for directly paying the rent, we could not do so as the case is sub- judice,” said Bhusal.
But lately Concept Developers has set preconditions for it to vacate the space. In fact, as per a request from the company, the trust last month gave it a 35-day deadline to vacate the space. The company failed to clear the property.
“We are now discussing how to recover the rent from Concept Developers for the period since the lease deal expired,” said Bhusal. “Our effort will be directed towards recovering the rent amount equivalent to the sum we had agreed with Kathmandu Metropolitan City.”
The company, however, is not ready to pay the rent for the last nine months, given that there isn’t a valid lease agreement between the two sides.
“How can we pay the rent without a valid lease agreement?” asked Sunil Shrestha, managing director at Concept Developers. “Shopkeepers and offices also have not paid us their rent for nearly a year.”
He, however, said his company was ready to pay the rent amount if the trust agrees to its proposal to extend the lease deal for the next 25 years. “We have proposed a monthly rent of Rs6.2 million, a sum more than what the Metropolitan City has offered.”
The company had earlier offered a much lower rate. According to a former official at the trust, it had initially proposed a rent of Rs800,000 per month. But Shrestha claimed that his company had agreed to pay Rs1.8 million initially and the offer was later revised to first Rs2.2 million and finally to over Rs6.2 million.
Due to dispute between the trust and Concept Developers, the latter has not been able to recover the rent from the shops and offices located at the Kathmandu Plaza. With the Trust not extending the deal, the company said that it is ready to vacate the space now.
The Supreme Court which had issued an interim order in favour of the company initially, lifted the order later. “We have been ready to vacate the space. We have issued a notice in the name of shops and offices to vacate the space. But, they don’t want to listen to us arguing that they had nothing to do with us due to the expiry of the rental agreement with us. The trust needs to help us to vacate the space,” said Shrestha.
Earlier, Concept Developers had sought an extension of the lease agreement as per the amended Nepal Trust Act-2007, which has allowed the trust to extend the lease deal. Many people suspect that provision was amended to enable the trust to extend its lease agreement with the Yeti Holdings for the operation of Gokarna Forest Resort. Owners of Yeti Holdings, including late Ang Chhiring Sherpa, are considered close allies of Prime Minister KP Sharma Oli.
“Because of its political influence, Yeti could get the lease agreement extended at a very low rate. But, the trust didn’t want to extend the lease with us even though we were ready to pay 10 times more than what we have been paying,” complained Shrestha.
With the trust failing to clear the space at the Kathmandu Plaza, officials from Kathmandu Metropolitan City have been forced to work out of eight locations. “Our plan was to run all our offices from a single location until our new building is built,” said Rajeshwor Gyawali, chief administrative officer at the Kathmandu Metropolitan City.
Its plan to build a new building has also hit a snag with conservationists moving to the court against the planned new construction as official need to demolish a Rana-era building to do so.
“Even now, we are ready to relocate to Kathmandu Plaza if the trust vacates the space for us,” he said.