India used to import sugar into Nepal every year by giving a price discount (levy). The government claimed that sugar was cheaper because India gave it at a levy. Such sugar had been imported since 2048/49. But while importing sugar, permission was given to certain companies without any competition, but it was sold at a high price in the market.

The Public Accounts Committee of Parliament, headed by Hridayesh Tripathi, had launched an investigation into the alleged irregularities in the sugar price concessions granted by India. The audit committee had launched an investigation into the fact that Supplies Minister CP Mainali had granted permission to Shankar Kedia's company Pearl Trading to import sugar.

The audit committee had formed an investigation subcommittee under the coordination of Congress MP Deep Kumar Upadhyay and taken statements from the concerned persons or decision-makers. The decision was questioned after the permission was granted to a private company with a profit of Rs. 4.75 per kg.

The government had written to the Indian Embassy on 2051 Falgun 30 to allow Kedia to import levy-free sugar. The audit subcommittee had called the Deputy Prime Minister, departmental ministers and government officials in turn to give statements about the decisions taken during the sugar import. The subcommittee had taken a statement from Supplies Minister CP Mainali on 2052 Baisakh 20.

During his statement, Mainali had said that he had written a letter to the Indian Embassy to allow Kedia to supply sugar as decided after discussions with the then acting Prime Minister and Deputy Prime Minister Madhav Kumar Nepal. Based on Mainali's statement, the subcommittee had also summoned Deputy Prime Minister Nepal for a statement on April 29.

The subcommittee had questioned Supply Minister Mainali about Nepal's name being included in the sugar import. Nepal had said that his name was unnecessarily included, 'He (CP) did not know how to use it.' The subcommittee had asked whether action should be taken against Mainali for unnecessarily including his name. In response, Nepal (laughing) had said, 'CP is slowly learning the ropes.'

Nepal had admitted that he had consulted him when the Prime Minister said that sugar was available cheaply when he was not in the country. But Nepal said that it was not his business to decide who to give permission to. Nepal was accused of holding a meeting at his own house and advising Kedia to supply sugar. Nepal, on the other hand, had insisted that the matter of sugar import was the responsibility of the Ministry of Supplies and that no meeting had been held at his house.