Industrial Sector Federation Warns Government Against Mocking Rule of Law Amidst Rent Dispute

Kathmandu. The Nepal Industrial Sector Industry Federation has expressed serious concern over the recently issued seven-day public notice and the Industry Minister's statement, issuing a stern warning to the government not to mock the rule of law. The industrialists have clarified that they are ready to pay rent according to the Supreme Court's verdict.

There are 10 industrial sectors in operation in Nepal with the objective of industrial development and job creation, where more than 700 industries are established and about 1 lakh citizens are employed. However, the rent increase dispute that started in the year 2075 BS has now taken a complex turn.

• What was the rent dispute?

In the year 2075 BS, the Industrial Area Management Limited decided to increase the rent by up to 700 percent in areas including Balaju. The industrialists strongly opposed the increase as 'impractical', and the dispute reached the court. As the industrialists were not satisfied with the decision of the High Court Patan, they went to the Supreme Court.

On Chaitra 12, 2080 BS, the Supreme Court gave its verdict in the dispute, ruling that it was not legal to collect 'retrospective' rent prior to June 22, 2079 (the latest decision to implement the rent). The court had ordered to set a new rent rate after June 22, 2079, and to form a committee within one month for rent review every 5 years.

According to the Federation's Chairman Ejaz Alam, the industrialists wanted to accept the verdict as a 'win-win' for both parties and proceed with the implementation process. However, the problem has been further complicated as the Industrial Area Management Limited decided to go for a review again under pressure from the Ministry of Industry.

• Federation's Objection and Warning of Collective Arrest

The Federation became agitated after the Industrial Area Management Limited issued a public notice with a seven-day ultimatum on Jestha 25, asking to pay the arrears. The Federation interpreted the notice, which also made public the names of industrialists with only 30 paisa arrears, as a 'hasty' move to defame the industrialists.

Chairman Alam complained that the Ministry of Industry, instead of playing a parental role, was treating the industrialists like criminals. He says, 'It is unfortunate that the minister is making threatening statements like taking action and arresting. Is it a crime to run an industry in Nepal? We respect the court's decision and are ready to pay the revised rent after June 22, 2079. For those with large amounts, provide installment facilities and reconcile the accounts.'

The Federation has prepared to go to court again for legal remedy and file a case of 'contempt of court' if the problem is not resolved within the seven-day notice period. Furthermore, a warning has been issued that if the government adopts a repressive policy, the 700 industrialists are ready to give collective arrest.

• Government's Stance and Arrears Status

On the other hand, the government has given a final warning to pay within seven days, stating that approximately 89 crore rupees are yet to be collected from industries operating in industrial areas across the country. According to the data of the Industrial Area Management Limited, a total of 88 crore 45 lakh 74 thousand 552 rupees are due from 635 industries and entities in 10 industrial areas across the country.

Of this, the largest portion is land rent amounting to 82 crore 7 lakh rupees. Similarly, building rent accounts for 2 crore 20 lakh, electricity charges for 3 crore, and water charges for 21 lakh 18 thousand rupees in arrears. In terms of areas, Balaju Industrial Area has the highest arrears (43 crore 98 lakh). Hetauda has 20 crore 90 lakh and Patan has 10 crore 90 lakh rupees in arrears. Established enterprises such as Bottlers Nepal (Coca-Cola), Nepal Gas, Gurans Engineers, and Balaju Auto Works are also included in the list of those who have not paid their dues.

Minister of Industry, Commerce and Supplies, Gauri Kumari Yadav, has made it clear that there will be no compromise in the recovery of revenue that should come into the state's coffer. The Limited has stated that the electricity and water lines of industries that do not pay their arrears within the stipulated time will be cut, the industrial premises will be sealed, and legal proceedings will be initiated against the operators for misappropriation of government funds.

Amidst the current economic slowdown, the industrial sector rent dispute has widened the gap between the government and the private sector. On one hand, industrialists appear ready to pay rent only after June 2079, as per the Supreme Court's verdict, while on the other hand, the government stands firm on collecting arrears from 2075 BS. The government's choice of a repressive path without fully complying with the court's order is likely to have a negative impact on the country's industrial environment and foreign investment. If a solution is not found through negotiation and agreement, there is a risk of more than 700 industries closing down and millions of jobs being jeopardized.