Padmasundar Lawati was the Minister of Agriculture in the government led by Sher Bahadur Deuba formed in Bhadra 2052 BS. His decision in the chemical fertilizer procurement process was controversial. In Asad 2052 BS, he had canceled the agreement given to purchase chemical fertilizers with the American chemical fertilizer trading company Semiconductor Material Inc. The procurement process of 50,000 metric tons of fertilizer was stopped on the instructions of Minister Lawati.

Govinda Prasad Srivastava, an American citizen of the company, had filed a case in the District Court in Washington DC, claiming that the Nepal government had caused him losses. A case was filed against the then Minister of Agriculture Lawati, Agriculture Secretary Dan Bahadur Karki, and General Manager of the Agricultural Materials Corporation Mingma Tshering Sherpa. A letter ordering the person concerned to appear in the Northern District Court in Washington DC by 10 Mangsir 2053 BS, saying that the American company had been cheated due to the wrong decision made by the minister, was sent to him by fax.

The court letter also included a phone number. The letter said, ‘If you do not appear on that date, an arrest warrant will be issued.’ This was probably the first time that a Nepali minister and high-ranking official was summoned for a statement by a foreign court.

Srivastava had claimed that he had already opened a letter of credit (LC) and loaded the fertilizer onto the ship, saying that 450,000 US dollars had been spent when his contract was canceled. But Agriculture Secretary Shahi said that Srivastava had submitted false documents. Shahi had said, ‘It was not certain where the fertilizer would be sent from, where to provide the company with financial support!’

The Council of Ministers had decided to give the company the contract to purchase the fertilizer on Falgun 24, 2052. But the Ministry of Agriculture claimed that the contract was canceled in Asard because the fertilizer was not delivered by Jestha. According to Secretary Shahi, the company had given the address of a Netherlands bank for financial transactions. But suspicions arose when the company's business and reputation were not seen in the bank, and the time for importing fertilizer had also passed. The government side said that the contract was canceled because it could not trust the company.

According to government officials, after the contract was canceled, the company tried to get the contract again under pressure from foreign diplomatic missions and international financial institutions. Secretary Shahi had informed that the then US acting ambassador Peter W. Bored had pressured him to get the contract. According to him, the International Fertilizer Suppliers Association, an international organization of fertilizer traders, had also pressured Srivastava to get the contract through the Royal Nepali Embassy in the US.

Secretary Shahi had informed that the board of directors of the Agricultural Materials Corporation would decide whether he would appear in the US court or send a written response. Srivastava had also filed a case in the Supreme Court of Nepal. He had said that according to the agreement, the Nepalese courts could take the decision. Agriculture Minister Lawati was involved in all the processes of assigning and canceling the responsibility of purchasing fertilizer to an American company.