The Standing Committee meeting held in Balkhu on February 16, 2006 could not reach any agreement on whether to remove or retain UML General Secretary Madhav Kumar Nepal. After failing to reach an agreement, disputes within the UML escalated and the party itself reached the brink of a split.

Bamdev Gautam, who was in the majority in the Standing Committee, had threatened that General Secretary Nepal would resign from his post or be expelled if he did not. Bamdev, who led the anti-Mahakali Treaty group, had threatened to remove Nepal from office through a vote. At that time, a dispute was seen within the party between those who wanted the Mahakali Treaty to be passed by the Parliament and those who did not. 26 UML leaders including General Secretary Nepal, Radhakrishna Mainali, CP Mainali, and Sahana Pradhan stood against the Mahakali Treaty. Leaders including General Secretary Nepal and KP Sharma Oli voted in favor of the treaty in the House. 26 rebels were asked for an explanation for not following the party's whip.

Against this backdrop, after the Standing Committee and Central Committee meetings held repeatedly at the party's central office to resolve the dispute failed to reach a decision, Bamdev had demanded a vote to decide on the General Secretary issue.

After the party's Balkhu meeting failed to reach an agreement, a meeting of the UML rebel group including Bamdev was held at the house of central member Keshav Lal Shrestha at Kuleshwor. The meeting demanded a vote on the proposal to remove the General Secretary by 19 Falgun 2053. Gautam's side said that if the vote was not taken by that day, they would remove Nepal from the General Secretary position with their majority. Central member Trilochan Dhakal had said that there was no option but for General Secretary Nepal to resign. Dhakal, who was removed from the coordinator of the All Nepal Farmers' Association, had reiterated that there was no option but to resign to resolve the dispute.

UML Chairman Manmohan Adhikari had said that he could not bear the party split if the proposal to remove the general secretary remained in place. He had said, ‘If the Gautam faction’s stance persists, I will also resign from the post of chairman.’ Chairman Manmohan had said that Gautam should withdraw the proposal to resign as general secretary. He had said that he did not want to see the party split and would resign as chairman if there was no agreement.

Manmohan, who stood in favor of general secretary Nepal, had said that there should be a discussion on the proposal made by central member Ishwar Pokharel against Gautam. Pokharel had accused Gautam of financial fraud, involvement in buying and selling MPs, and collecting commissions during the nine-month-old government of UML in the meeting on the 13th. There was a demand for an investigation since the matter had entered the central committee.

In the meeting, central member Tulsilal Amatya supported Manmohan’s statement and said that Gautam was wrong to ask for the resignation of the general secretary. Amatya had accused Gautam of going door to door to gain a majority. Stating that the post of general secretary is not a permanent one, he said that it would send the wrong message to the people. In 2050 Jestha, after the death of the then general secretary Madan Bhandari in the Dasdhunga accident, the central committee itself made Nepal the general secretary.

After the internal dispute reached a point of division in the party, the UML Kathmandu Special Committee Area No. 1 decided to put pressure on a solution by making a unanimous decision. For that, a plan was made to surround the party's central office. The special committee had concluded that the issues raised in the party's central committee were activities against the communist movement and the aspirations of the country and political culture.

Demand for investigation against Pokharel too

Ishwor Pokharel had demanded an investigation into the serious allegations made by Bamdev Gautam. He had said that the issues he raised would be raised at some point or the other and that a discussion should be held. Pokharel was demanding that Gautam's mistakes be discussed. Pokharel was the chief advisor when Manmohan Adhikari was the Prime Minister. Rebel UML leaders demanded an investigation, saying why Gautam was given the freedom to do wrong things when he was an advisor.

Legal practitioners close to UML had decided to seek an investigation from the authority, saying that Pokharel should confirm the allegations made by Pokharel. Legal practitioners had demanded an investigation, saying that during the UML's time, illegal activities such as allowing foreign exchange to be misused, allowing Gautam to interfere in customs and Tribhuvan Airport by abusing authority, smuggling gold, and helping to earn commissions were committed. They had demanded that the authority investigate Pokharel and Gautam, the Prime Minister's chief advisor.

Pokharel had demanded that all issues be brought to light by an investigation, saying that raising questions about a leader would mean defaming the entire party. He said, 'Why are our party and respected leaders being accused?' Our position had to be clear, there had to be an investigation. Even if I had not raised the issue in the central committee, someone would have raised this issue tomorrow.’

There was a coalition government led by Prime Minister Sher Bahadur Deuba in the country. RPP parliamentary party leader Lakendra Bahadur Chand had been put forward by UML as the Prime Minister to topple that government. When the coalition government was about to collapse, both UML and Congress were in internal problems. The root of it was power and the political power to be gained from it.

No-confidence motions were brought against the Prime Minister twice in the 16 months since the government was formed. UML had not given up its stance that the government should be toppled. That also had an impact on the parties. Since no party would form a government without its support, the RPP had used both Congress and UML in the greed of gaining positions and power. That was the biggest foundation of instability. Focusing on the increasing internal strife within the UML amid political instability, journalist Gunaraj Luintel published a news story titled ‘Manmohan Singh Threatens Resignation: Left Wing Majority Decides to Remove General Secretary’ in Kantipur Daily on 17th Falgun 2053.