For the public, better road system often means more convenience, better life quality, economic development and possible appreciation in property value in the area. However, it should be noticed that these possible improvements come at a cost bore by a minority of property owners whose right has been seriously infringed. The Constitution of Nepal allows private property to be taken in case of its public utility under the premises of due compensation. This paper focuses on several case studies of property right violation in Biratnagar and the laws regarding land acquisition in Nepal. A weakening situation of property rights in Nepalis observed through our case analysis.

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Road Expansion and Violation of Private
Property Rights in Biratnagar
Astha Joshi
February 2016
Published by
Bikalpa-an Alternative

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Acknowledgement
This paper would not have been possible without the input and support
from a lot of individuals and organizations. We would like to begin by
expressing our sincere gratitude from the property owners who shared
their stories on how the Biratnagar Sub-Metropolitan City’s road expan-
sion initiatives had violated their property rights.
We would also like to thank the Appellate Court at Biratnagar for shar-
ing information on the cases pertaining road expansion with us. We
would also like to thanks Biratnagar Sub-Metropolitan City, members of
Nagarik Adhikar Samraxan Samaj, and the entire respondents for their
valuable time and information regarding the road expansion initiatives.
We would like to thank Ms. Astha Joshi for her immense and valuable
support for helping us to write and finalize the paper. Without her con-
sistent support it would have been difficult for us to come up with the
complete study.
We would also like to extend our gratitude to Mr. Punam Giri and Sarw-
agya Raj Pandey for their incredible support in collecting the data from
the respondents.
Lastly we would like to thank Ms. Laura Liu, Economic and Trade Pol-
icy Advisor at Atlas Network, who provided valuable insights for both
the initial and the final draft of the paper.
We hope that this paper would shed some insight on the importance of
property rights, how it helps in transactions that are voluntary that helps
in strengthening economic development. The main objective of the pa-
per is to show where Birtangar stands in terms of property security and
why they matter.

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Abbreviations
ADB Asian Development Bank
BSMC Biratnagar Sub-Metropolitan City
DUDBC Department of Urban Development and Building
Construction
GoN Government of Nepal
MUD Ministry of Urban Development
STIUEIP Secondary Towns Integrated Urban Environmental
Improvement Project
TDF Town Development Fund

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Table of Contents
Overview 1
What are property Rights? 3
Situation of Private Property Rights in Nepal 5
Case studies 8
Conclusions 13
Works Cited 14

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Overview-
Biratnagar is one of the major cities in the Eastern part of Nepal. The
city is surrounded by four rivers: Singhiya River in the east, Kesaliya
River in the west, Tanki Sinawahi in the North and Jogbani border (In-
dia) lies in the South. The city holds a great importance to Nepal for
historical, economic and the political reasons.
In 2014, the Sub-Metropolitan City of Biratnagar has launched sever-
al road projects aiming a road expansion in inner city, including old
market places and residential areas. To date, around 65 kilometers of
the road project have been under construction while the rest remains
a work in progress. (Gopal Regmi: Personal Interview, July 8, 2015).
According to a residents’ survey and relevant reports, part of the road
constructions has resulted in infringement of private property from the
residents. Conflicts between property owners and government wors-
ened amid the development of a sewage system.
According to several sources, the project is financed directly or indirect-
ly through government funding and Asian Development Bank (ADB)
loans. The financing included ( in April 2013) 5.96 million USD from the
Government of Nepal (GoN), 24.21 million USD in loan from the ADB,
4.098 million USD in loan from the Town Development (TDF), and
2.98 million USD from the Biratnagar Sub-metropolitan City (BSMC)
which totaled around 37.352 million USD for the project. (Asian De-
velopment Bank, 2010)
The road expansion was first proposed by the previously elected rep-
resentatives of Biratnagar municipality to be implemented on May 8,
2000 (26 Baishak, 2057) (Bikalpa-an Alternative, 2015). However, the
road expansion project was never really carried out. Present Biratnagar
Sub-Metropolitan City (BSMC) office started the road expansion drive
after its agreement (in October 26, 2010) with Asian Development
Bank’s (ADB) for Secondary Towns Integrated Urban Environmental
Improvement Project (STIUEIP). The project was launched on Decem-
ber 8, 2013 and scheduled to be completed by May, 25, 2016.
Local Government issued two policy guidelines in February 2014 and
publicly announced that residential properties within the parameter
of project construction shall be demolished. Due to an unclear clari-
fication on property right, conflicts arose between the local residents
and municipal authorities. Eighteen people whose property had been
marked for demolition filed a case for the stay order against the Birat-
nagar Sub-Metropolitan City (Rajendra Humagain, Personal Interview,
July 12, 2015). However, the court did not issue the stay order; instead,

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they issued a verdict which stated that the municipality had to follow
due process for compensation for the acquired property of citizens (Ra-
jendra Prasad Humagain. v. Biratnagar Sub-Metropolition Office, Birat-
nagar, Morang et al, 2015).
For the public, better road system often means more convenience, better
life quality, economic development and possible appreciation in prop-
erty value in the area. However, it should be noticed that these possible
improvements come at a cost bore by a minority of property owners
whose right has been seriously infringed. The Constitution of Nepal al-
lows private property to be taken in case of its public utility under the
premises of due compensation. This paper focuses on several case stud-
ies of property right violation in Biratnagar and the laws regarding land
acquisition in Nepal. A weakening situation of property rights in Nepal
is observed through our case analysis.

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What are Property Rights?
What constitutes property rights has always been a matter of debate in
terms of the philosophical level goes back to Plato and Aristotle’s time.
Plato believed in an ideal society where property ownership should be
communal as rulers of the city owning property would mean divid-
ing the city over the issue of who owned what, “mine” and “not-mine”.
Meanwhile, Aristotle believed that property had to be owned privately.
His reasoning was that if the property was common, that people would
not take care of it- “that which is common to the greatest number has
the least care bestowed upon it” (Anderson & Huggins, 2009).
According to Libecap (1986) “Property rights exists as a continuum.
They range from open-access conditions at one extreme to limited and
vague rights definitions, and to specific, exclusive property rights at the
other extreme. Property rights may be held by individuals (private prop-
erty rights), groups (collective rights), or the state (an extended form of
collective rights)”. Property rights as per Alchian (2008) is defined as an
‘exclusive authority’ of the property owner, both government or indi-
viduals to decide how to best use the resources they have the power to
decide the usage of the resources. Anderson (2009) (in Property rights:
A practical guide to freedom and prosperity, 2009) further mentions the
rights of ownership is not just the right to use the property for profit
but to also exclude others from using the asset as well as transferring it.
Alchian (2008) also refers to it by stating that if the definition of prop-
erty rights in terms of an individual than it would attribute their right to
earn profits from the asset by whichever means the individual believes
is right as long as they do not impede on the rights of others, and the
right to transfer the property as per the price they believe is appropriate
or fit for it.
John Locke in The Second Treatise on Government (1690), Locke ar-
gued how the concept of property rights had existed even before the ex-
istence of a government. He believed that “Every Man has a Property in
his own Person,” the rights to their own life and liberty. Locke also stated
that a man had a right to his own labor and because of that the also
had the right to the fruits of his labor and that the primary purpose of
the government was to protect these natural rights. According to Locke
“The great and chief end therefore of men uniting into commonwealths,
and putting themselves under government, is the preservation of prop-
erty.” Adam Smith in his The Wealth of Nations (1776) further discussed
about the government roles in defending private property was created
because of it and how it led to the creation of new property (Anderson
and Huggins, 2009).

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In the studies of economics, various studies have indicated the impor-
tance of institutions to be a powerful determinant of growth, one of
which is property rights (Rodrick 2000b, 2003, 2004b, 2007 as cited in
Locke, 2013). North (1990) emphasized on how secure property rights
were a necessary condition for economic development. He stated “Insti-
tutions are the rules of the game in a society, or more formally, are the
humanly devised constraints that shape human interaction. In conse-
quence, they structure incentives in human exchange, whether political,
social, or economic.”
According to Belsey and Ghatak (2009) “One key role of property rights
is to facilitate exchange and allow producers/consumers to exploit gains
from trade.” Gwarntney, Stoup & Lee (2005) further state trade as a cur-
sor for the economy’s growth and the enforcement of property rights
are the necessary condition for it. According to Hart (1995) (as cited in
Belsey and Ghatak, 2009) Property rights “convey residual control rights
to the owners. These rights represent a source of freedom to those who
hold them, allowing them to decide what he or she would like to do with
the object (subject to any legal or technical constraints).” Grwartney,
Stoup & Lee (2005) also state that strong private property rights provide
the incentive to protect their property-preserving it, utilizing resources
effectively, developing property, as well as conserving property for the
future with the higher chances of trading and its benefits in line with “
balancing the demands in the present with the potential demand in the
future. Strong property rights translate to prosperity. Studies show that
countries with higher property rights have better prosperity.

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Situation of Private Property Rights in Nepal
As per the Economic Freedom of the World Report, Nepal scored 4.10
in the year 2012 which places it below the world average of landlocked
countries and South Asian Countries. The Interim Constitution of Ne-
pal guarantees Right to Property as a Fundamental Right. However, its
practice has been violated as seen in the case of the Biratnagar road
expansion drive under the Chief Executive Officer of Biratnagar Sub-
Metropolitan City, Gopal Regmi.
The acquisition of private land for public purposes or public benefits
has emerged as a significant threat to property rights in Nepal. In recent
years road expansion drive in Kathmandu valley and many other parts
of Nepal such as Biratnagar is an example of the threat to private prop-
erty rights. The Interim Constitution of Nepal 2007 has certain provi-
sion to protect individual property. Article 19: Right to Property states,
“(1) Every citizen shall, subject to the existing laws, have the right to ac-
quire, own, sell and otherwise dispose of property.
“(2) The State shall not, except in the public interest, acquire, or create any
encumbrance on the property of any person. Provided that this clause shall
not be applicable to property acquired through illegal means.
“(3) Compensation shall be provided for any property requisitioned, ac-
quired or encumbered by the state in implementing scientific land reform
programmes or in the public interest in accordance with law. The amount
and basis of compensation, and relevant procedure shall be as prescribed
by law.”
The Land Acquisition Act 1977 is written respecting the three points
that protects individual property. It has clear guidelines for property
acquisition process. It has set due process that clearly states that the of-
ficer initiating the preliminary action has to give a notice to the required
stakeholder, carry out necessary survey work. It also clearly states the
need to pay compensation for the losses. The compensation amount is
decided by the officer responsible for the preliminary action. The private
property owner also has the right to file a complaint with the Chief Dis-
trict Officer if they are not satisfied with the amount determined. Only
after submitting a report of preliminary action, the local officer issues
notification regarding the acquisition (reason for the acquisition, land
details, survey measurement and such).

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In regards to the local body- in the case of Biratnagar, the Sub-Metro-
politan City of Biratnagar, has the right to acquire property for public
purpose. However, the Local Self Governance Act 1999 Part – 5 General
Provisions relating to Local Body- Acquisition of property stays true to
the three points of the Interim Constitution regarding property rights.
It states-“In case the local body has to acquire land to carry out any de-
velopment and construction works within its area, it may acquire the land
required for that work by following the requirements of the prevailing law
and providing compensation to the concerned land-owner for the land.”
In the case of Biratnagar, as per the interviews conducted with people
who had lost their property to the road expansion project, they had only
received notice regarding the demolition. A few who had filed cases
against the expansion with the municipality had got the verdict from the
court at Biratnagar that specifically stated the Sub-Metropolitan City to
pay proper compensation. However, the promised amount has not been
actualized. Furthermore, the compensation amount as per the acts had
to be decided before the acquisition. The land acquisition at Biratnagar
did not follow any such process. This questions the legitimacy of the
acquisition. It also raise question regarding how justifiable is it for a gov-
ernment body which was established to serve the needs of the people to
bypass the procedure clearly stated in the Local Governance Act to carry
out the road expansion work.
Furthermore, the violation of property rights was also clearly seen in
the road expansion drive in Kathmandu in 2011 under the premiership
of Dr. Baburam Bhattarai who too did not follow the due procedures.
Property owners who had lost their property to the expansion drive
also did not receive any compensation. However, the Government did
commit to paying the compensation if the acquired land also housed a
physical property over it (Republica, 2012). The Economic Freedom
Country Audit Nepal Report (2015) mentions that the state determined
the compensation amount based on the damage to the physical property
and not the land. However, the compensation was paid after the demoli-
tion, which is against the due process that clearly states the need to pay
50 percent of the compensation before acquisition.
In the case of Biratnagar, the Sub-Metropolitan City has not commit-
ted to paying the compensation amount and conducted the expansion
by violating the procedures as stated in the laws. Some of the property
owners whom were interviewed stated that they had not bothered filing
a case against the municipality after receiving the notice, and had car-
ried out voluntary demolition knowing they would never receive the
promised amount.

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The new constitution of Nepal, passed on September 20, 2015 consists
of provisions that further weaken property law in Nepal as there was no
mention of the due process for compensation. It also fails to address the
procedures which may justify valuation process of the compensation.
As per the unofficial translation in The Economic Freedom of the World
Report for Nepal, Article 25 - The Right to Property states,
“(3) … when the state acquires private land for purposes relating to public
interest, the basis and process of compensation will be as per the law.
“(4) Nothing … shall be deemed to prevent the State in enforcing land
reform, management and regulation for the purpose of increasing produc-
tion and productivity of land, modernization and commercialization of
agriculture, environment preservation, organized housing and planned
urbanization.
“(5) As per the sub-article 3, when the state acquires any individual’s pri-
vate property for public interest purpose, nothing shall prevent the state
from using the property in any other public interest purpose than the one
cited at the time of acquisition.”
This creates serious threat to privately owned property and adds up the
fear of residents at Biratnagar who are concerned about Biratnagar Sub-
Metropolitan City upcoming expansion of the public drive. According
to the Chief Executive Officer of Biratnagar Sub-Metropolitan Office,
Gopal Regmi, in regards to compensation, the municipality is in the
process of providing the exemption of house tax for three years after
they rebuild their homes again as per the municipality guidelines for
building homes (Personal Interview, July 8, 2015)

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Case studies
The Case study of Koumodaki Pd. Rijal – Agreements under
Coercion
Koumodaki Pd. Rijal mentioned that he had been given a notification
of 35 days to demolish his property for the road expansion project.
The municipality officials sent another notice when the deadline was
approaching stating that they had to leave the house by 10 a.m. Since he
had not got any compensation for his property, he had to launch a case
against the municipality.
“My house was built as per the rules and regulations for building.
They first bull dozed Rajendra Humagain and my house as we had
filed a case against them. All I had asked for was the security of my
fundamental rights. I live in my house legally, by paying house taxes to
the municipality in a house built as per the rules and regulation of the
building code,” laments Rijal.
At the court Rijal presented his case stating that he was not anti-
development. He was willing to give his property considering under
the premises of paid due compensation. Rijal filed a case for stay order
but did not win it. He recounts how a crowd of strangers whom claim
themselves as authorized by the municipal government approach him
with a folded paper that said that we need to demolish the house by
seven days. “I told them that I would not sign the paper but the crowd
of 500 people forced me to sign the paper.” Said Rijal.
According to Rijal, during a court hearing he came to know that the
paper he had signed included a paragraph with his name, along with
other people who had filed a case against the municipality which
reads, "We willingly give away our private property for development
purpose even if it means that we lose all our property. We were not
anti- development." Rijal went on nullifying the statement clarifying,
“At the court, I told the presiding judge that I was not stupid to sign
such a paper. If I had agreed to it than the paper should also include a
registration letter as well as my application. The signed document does
not prove anything which we were coerced sign.”

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The Case study of Rajendra Humagain: A Lawsuit against
the Municipal Government
Rajendra Humagain, a local resident of PaniTanki had registered a court
case against the demolition of his property by the Municipality which
ends up with a hearing on his favor stating that the municipality had
carried out the road expansion project violating proper rules and process
on acquisition and compensation. In order to prevent his property from
bulldozed he had also filed a case requesting a due procedure from the
municipality which, however, was rejected by the court.
According to Humagain, the municipality came to bulldoze his property
after the court rejected his plea for stay-order. He recounted the tension
between him and the municipality officers working on the project. He
was under severe threat to give out his property. “They violently forced
me to stamp my fingerprints on the papers that stated we have agreed
to carry out bulldozing the houses for road expansion,” said Humagain.
As a result, Humagain lost nearly 12 to 13 Lakhs (around USD 12,000)
due to the loss of 8 square feet property, including five pillars of his
house. "The municipality had given me a 24 hours ultimatum which
was why we had filed a court case against the municipality. Despite the
court's hearing which stated we receive due compensation, we still have
not received any compensation as such. Because of this, we might have
to go and file another case against the municipality."
The Case study of Roop Tamrakar, Biratnagar-Pokhariya 4:
Unjustified Cost Bore by Property Owners
According to Roop Tamrakar “My land was 5 dhur1
. Due to the road
expansion 7 feet of my property was gone. My land is elongated,
stretching from one face to another.” Roop Tamrakar, before the
expansion project, operated two small businesses from his small
property- a poultry and a tailor shop. Because of the demolition,
more than half of his property on which he rely for his livelihood
was demolished. In order to repair his house, he would have to spend
Rupees 4 lakh (around USD 3600). “I along with many others got a 35
days deadline regarding the demolition. A huge crowd of people from
1 1 Dhur (धुर) = 182.25 sq.ft.

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the municipality came with bulldozers to demolish the property. We got
scared since they started bulldozing buildings nearby. They said that we
can sign the papers stating that we will demolish our private property
ourselves. So, we decided to sign it.”
Roop Tamrakar laments that he had always been paying his property
taxes and land taxes annually. Despite the cost derived from the
construction, he had not received any compensation largely due to the
fact he filed a case against the municipality asking for compensation.
“The verdict was in our favor but we haven't seen one rupees of it
till now. It has been difficult to earn a living and I also had fear for
my security as the demolition took away the front face of the house.
We didn't have doors to lock at night. I had to stop my work for three
months.”
Tamrakar does not have any idea regarding the compensation rate but
according to him the market price of his encroached property is around
Rs. 16 Lakh (around USD14, 500).
The Case Study of Badri Bijeshan: Lack of Trust in the
Governance System.
Badri Bijeshan, a permanent resident of Biratnagar, works as ticket
operator for a local bus company. He had to demolish his house built
on 12 dhur due to the government road expansion project. 3 dhur of his
house was marked for the road expansion project, however, in order
to give way the 3 dhur (10 feet) he had to demolish his whole house.
The land and house are his ancestral property. "I spent around 3 and a
half lakh (around USD 3200) for demolishing the building, rebuilding
it would cost another 2 crores (around USD 183,000)" stated Bijeshan.
Bijeshan lamented how he and his neighbor’s had neither received an
official letter nor informed of the plans related to the expansion project.
“They (municipality) came to our neighborhood and announced about
the expansion project through mikes. When they came to demolish our
houses, we went to the municipality collectively to request them one
month grace period to carry out the demolishment by ourselves."

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To date, they have not received any compensation. When he enquired
about it with the municipality, the Chief Executive Officer of Biratnagar
Sub-Metropolitan City, Gopal Regmi advised him to file a court case
regarding compensation and they (municipality) would only compensate
them if the court issued a verdict.
Badri Bijeshan's has operated two shops at the ground floor of his house
and rented out a few room and shutters for additional income. He said “If
the government needs to acquire private property for development, it is
completely ok, we will give it, but after receiving proper compensation.”
Although he has heard of a few people who had filed legal case against
the municipality, he did not pursue it himself believing that it would
be difficult to win a case against the government. Badri has not hopes
of getting his compensation and states that if the municipality plans
on increasing the roads again in future due to congestion, he would
probably have to demolish his house again.
The Case study of Rajendra Gupta: Involvement of Civil
Society in Protecting Property Rights
Rajendra Gupta is one of the founding members of the Nagarik Adhikar
Samraxan Samaj, which was established with increasing concerns
regarding the high house and land tax in Biratnagar. When Municipality
started the road expansion projects, they formed a Sangarsha Samiti
(protest committee) to raise a voice against the municipality road
expansion activities which was started without any planning or project.
Before, the road expansion, the municipality brought a program to better
the sewerage system which was financed by the Asian Development
Bank's. There was no public enquiry or acknowledgement on the project,
however, the municipality only kicked off the road expansion after
giving notice by bulldozing private properties. In some cases, private
property owners filed cases and the court issued a decision which states
that for public interest, the road expansion should be carried out only
after paying proper compensation to the property owners. However, the
due process validated by court was not followed by the municipality
and many still have not received any compensation for losing their
property.

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Rajendra Gupta states that "Over the years, housing area around the
inner city area grew, and infrastructure development was mostly
centered there. But the ring-road areas were neglected, where
infrastructural development was clearly needed. The municipality
had to give compensation of the total land and property that had to be
damaged, or financial assistance for rebuilding. However, nothing has
been done so far.
Furthermore, the residents were told that if the property owners would
not give their property for the road expansion, that they (Municipality)
would come and bulldoze the homes by themselves and the cost incurred
would have to be paid by the property owners. “Most of the property
owners decided that they would have to face double disadvantage from
the deal since they would not only have to pay for the bulldozing, they
would not get their infrastructural materials, and would have to also
pay for rebuilding by themselves. Due to this, the sense of security of
property rights is shattered,” stated Gupta.
There are no validated legal processes or procedures for calculations
regarding damages, cost estimates and rebuilding caused by this
road expansion project. The budget and operation process were not
transparent and has not been disclosed till date. Gupta mentions the case
of Hospital Chowk. “The lane has 6 private hospitals where there are not
enough parking spaces for even six rickshaws but the municipality had
given those permits to build hospitals there. This shows the weakness of
the planning by the municipality who has been complaining about the
narrow lanes in the city.”

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Conclusions
TheroadexpansiondriveatBiratnagarwitnessedhowgovernment
appointed bodies was carrying out expansion drives disregarding
the due process stated, validated and approved by the law. The
state body was found to have violated the fundamental principle
of democracy-rule of law as well as well as the decisions of
the judicial system. The road expansion project was started
after the initiation of The Secondary Towns Integrated Urban
Environmental Improvement Project for sewerage and drainage
system. The road expansion project is not directly operated by
the Asian Development Bank; however, the project does state
repairing roads and lanes in Biratnagar under the municipality’s
sealed line.
Apparently, the project was carried out without following
due process approved by law especially with regard to its
implementation procedures and actualization of financial
compensation to the property owners affected by the road
expansion. For the property owners who have lost some part
of their houses and lands, the rebuilding process would cost a
significant amount of money. Their plight has been ignored. The
process through with the demolition was carried out raises serious
concerns about the security of property rights as stated in the
Interim Constitution of 2007. Furthermore, failure to define and
clarify on the property valuation methodologies and due process
for implementing public acquisition of private properties and
related compensation creates serious threat to private property
rights in Nepal. It fundamentally challenges the principles of rule
of law. Legal experts and policy makers should review related
laws and policies to avoid a growing tension between the public
and municipal government amid development of public facilities.

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Works Cited
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