Nepal Trust unable to earn 10 months’ rent from Kathmandu PlazaFollowing the expiry of the agreement between the trust and Concept, the shopkeepers haven’t paid any rent to Concept and Concept also has not paid rent to the trust.
Even though the Nepal Trust largely vacated the Kathmandu Plaza on Thursday, it failed to get even a single penny from those who rented the property. The trust is learnt to have lost around Rs 6 million in potential rent income of the last 10 months.
After its 27-year lease agreement with the Concept Developers Private Limited, the company that built the Kathmandu Plaza, expired in June last year, the trust was preparing to rent the building out to the metropolis for Rs6.05 million per month.
The new monthly rent is almost 10 times the rent Concept Developers had been paying the trust. Before the lease agreement expired, the Concept was subletting the space to various shops and offices and paying the trust a lump sum of Rs 625,000 per month.
But the trust’s failure to rent the building out to the metropolis may cost it dear. Due to the interim orders issued by both the Supreme Court and the High Court Patan against the trust’s attempt to vacate the building got delayed although both the interim orders have now expired. Both the shopkeepers and Concept had filed writ petitions to have their way.
Following the expiry of the agreement between the trust and Concept, the shopkeepers haven’t paid any rent to Concept and Concept also has not paid rent to the trust.
Now for the period since the expiry of their agreement, the trust has demanded that the Concept should pay the rent at the same rate as what the Kathmandu Metropolitan City has agreed.
“We wrote to Concept on April 12 demanding rent as per the new rate set for the Kathmandu Metropolitan City for the period of the past 10 months,” said Suresh Acharya, executive secretary at the trust. “But, the company refused to receive our letter.”
“Concept should pay any damages caused to the trust due to this unwarranted delay,” he said.
However, Concept is not willing to pay any rent for the last 10 months arguing that there is no legal basis for the trust to claim the rent.
“Firstly, we have no agreement with the trust that enables the trust to claim compensation from us,” said Sunil Shrestha, managing director at Concept Developers. “How can we pay the trust when the shopkeepers and offices haven’t paid us the rent?”
He also said his company was not willing to pay even the rent as per its old agreement (Rs625,000 per month) until the shops and offices pay that first.
“We haven’t earned any rent for nearly a year from the shops and offices. Instead, we had to spend around Rs 1 million per month in electricity and water tariffs and security. “Since we are already suffering losses, we cannot pay the trust,” Shrestha said.
However, Acharya argues that Concept should pay the rent as the latter was still running its office at Kathmandu Plaza.
Vacating the Kathmandu Plaza became difficult after the Supreme Court first issued an interim order after Concept challenged the trust’s decision. Later, the shopkeepers in the Kathmandu Plaza also moved the High Court Patan and secured an interim order against vacating the space.
But the Supreme Court discontinued its interim order after a few months. “Ever since the court discontinued its interim order, we were preparing to vacate the space. We had notified the shops and offices to leave the building. But they don’t want to listen to us arguing that they have nothing to do with us as their contracts were with Concept and not us,” said Shrestha.
Earlier this year, the High Court also discontinued its interim order paving the way for the trust to vacate the space. But it took time for the trust to vacate the space hence the losses.
In fact, at the same time when the Cabinet decided to rent out Kathmandu Plaza to the Kathmandu Metropolitan City, Concept also sought a 25-year extension of its lease and proposed to pay Rs6.2 million per month, which is more than what the Metropolitan City had offered. Trust officials, however, said the Concept made the proposal after the Cabinet decision.
Earlier, the company had offered a much lower rent. 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.
“If Concept was really interested in extending the lease agreement, it could have made its proposal on time. We saw that they were just haggling for lower rent,” said Acharya. But even after agreeing to vacate the space, Concept has not withdrawn its petition, which is still sub judice at the Supreme Court. “We didn’t withdraw the petition because we believe that our lease agreement should have been extended as per the amended Nepal Trust Act-2007.
Many people suspect that the provision was amended to enable the trust to extend its lease agreement with Yeti Holdings for the operation of Gokarna Forest Resort. Owners of Yeti Holdings, including the late Ang Tshering Sherpa, are considered close allies of Prime Minister KP Sharma Oli.
“The Gorkana lease deal with Yeti Holdings was extended several years before its expiry and for just 1.5 times more than the existing price. But, the trust refused to extend our lease although we offered 10 times more money than our previous lease deal,” said Shrestha.
Even after the Kathmandu Plaza is vacated, it may take some time for the Kathmandu Metropolitan City to shift to the Plaza. Subhas Raj Kafle, who is formally associated with Concept Developers, had filed separate writ petitions at the High Court Patan and the verdicts are expected in early May.
“We have already made preparations to move our office to Kathmandu Plaza,” said Ishwar Man Dangal, spokesperson at the Kathmandu Metropolitan City. “We will move once things become clear.”