We offer professional legal services for assessment, preparation, and representation in claims for compensation arising under the prevailing laws of Nepal, including the Muluki Civil Code, 2074. Our services include reviewing relevant documents and evidence, identifying the applicable legal provisions and basis of compensation, assessing the nature and extent of loss or damage, preparing necessary legal notices, applications, claims, and pleadings, and providing legal representation before the competent authorities and courts, as applicable.
Our objective is to protect the client’s lawful rights and interests and to pursue appropriate compensation through the remedies available under Nepalese law. We will provide legal advice based on the facts and documents supplied by the client, maintain confidentiality, and assist throughout the relevant legal process. Professional fees, court fees, government charges, and other necessary expenses shall be determined separately based on the nature, complexity, and stage of the matter.
Legal Provisions Relating to Compensation in Nepal
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Constitution of Nepal, 2015 — Right to Property
The starting point for compensation relating to private property is Article 25 of the Constitution of Nepal. It guarantees every citizen the right to acquire, own, sell, dispose of and otherwise deal with property, subject to law.
The State cannot acquire or otherwise interfere with a person’s property except in the public interest and in accordance with law. Where property is acquired for public interest, the Constitution requires compensation in accordance with the law, including the basis and procedure for determining such compensation.
Accordingly, where the State seeks to acquire privately owned land for a lawful public purpose, the question of compensation is constitutionally recognized.
2. Muluki Civil Code, 2074 — General Principle of Compensation
The Muluki Civil Code, 2074 (2017) contains several provisions dealing with compensation for loss and damage.
Of particular importance is Section 266, which provides for determination of compensation where a person is legally entitled to compensation. Where the concerned person claims compensation, the court must determine compensation while deciding the case.
Unless another law provides otherwise, the court considers:
- actual loss or damage;
- loss of income resulting from the damage; and
- additional actual loss or damage suffered as a consequence.
Importantly, compensation must be based upon actual and ascertainable loss or damage. Compensation cannot ordinarily be awarded merely on the basis of hypothetical or speculative loss.
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Wrongful Possession or Use of another Person’s Property — Section 274
Section 274 of the Muluki Civil Code, 2074 is particularly relevant to property disputes.
Where a person possesses or uses another person’s property forcibly, mala fide, or secretly, that person may be required to:
- return the property;
- return the benefit obtained from its use; and
- Pay reasonable compensation for loss caused through negligence in possessing or using the property.
The provision also deals with loss or damage occurring while property is under another person’s possession or usufruct.
This provision may become relevant where unlawful possession or use of privately owned property results in demonstrable financial loss.
4. Contractual Compensation — Section 500
Where the compensation claim arises from a contractual obligation, Section 500 of the Muluki Civil Code is important.
Under Section 500, if a person who is required to perform an obligation fails to perform it, or delays performance, and another person suffers loss or damage as a result, the person responsible must compensate for the actual loss and damage caused by the failure or delay.
Thus, compensation under Nepalese civil law is not limited to property disputes; it also extends to contractual breaches.
5. Civil Procedure Code, 2074 — Determination of Compensation
The Muluki Civil Procedure Code, 2074 provides the procedural framework for civil litigation. Section 266 of the Civil Code establishes the substantive principle that, where compensation is legally available and claimed, the court should determine it.
The important distinction is that a claimant must establish a legal basis for compensation and actual loss. Merely establishing that a legal right was affected does not necessarily establish the amount of compensation without evidence of the resulting loss.
6. Acquisition of Private Property for Public Purpose
For government acquisition of private land, compensation is also governed by the Land Acquisition Act, 2034 (1977) and the applicable rules and procedures.
The constitutional principle is that acquisition must have a lawful public purpose, and compensation must be determined according to the applicable law. The statutory framework provides mechanisms for determining compensation in cases of compulsory acquisition. Nepal Law Commission materials also identify provisions concerning the method of determining compensation where property has been acquired.
Therefore, a claim involving government acquisition should normally examine both Article 25 of the Constitution and the Land Acquisition Act, 2034, rather than relying solely on the Muluki Civil Code.
7. Compensation in Criminal Matters
Compensation can also arise where the loss is the consequence of a criminal offence. The Criminal Offences (Sentencing and Execution) Act, 2074 contains provisions requiring reasonable compensation to victims for damage resulting from an offence.
The statutory approach can take into account factors such as physical, mental and emotional harm, the victim’s circumstances, and other relevant considerations.
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