KATHMANDU (AP) Nepal's Prime Minister, Pushpa Kamal Dahal, (Prachanda) has announced his resignation on national television after the President overturned his decision to dismiss the Army Chief.

Prachanda made the announcement on Monday after meeting with his party leaders and Cabinet.

The Nepalese Prime Minister sacked army chief, Rookmangud Katawal, on Sunday but President, Ram Baran Yadav, rejected the decision and ordered Katawal to return to work in a late night statement.

Maoists threaten to go to court against President's action

Nepal's political crisis deepened on Monday with the Maoists terming President Ram Baran Yadav's directive to sacked Army Chief Gen. Rukmangad Katawal to continue in office as a "constitutional coup" and threatend to move the court against it, reports PTI.

The tussle between Prime Minister Prachanda and the President came amid a rift in the ruling Maoist coalition government with a number of parties disassociating themselves from the Cabinet decision to sack Gen. Katawal accusing him of defying the Government's order on various issues.

As Mr. Yadav refused to endorse the decision taken by the Maoist cabinet on Sunday, Prachanda convened an urgent cabinet meeting today to discuss the current political situation. He is also scheduled to address the nation.

"We have decided to fight against the (President's) move in the court, streets and Parliament," top Maoist leader Bahadur, Rayamajhi, said.

Another top leader, Krishna Bahadur Mahara, said Mr. Yadav's action was tantamount to a "constitutional coup". "The President is violating constitutional norms. His move has put peace process in peril."

The defiant Maoist leader said "the executive powers to sack and appoint an Army Chief lies with the Government and not the President. We will stick to our decision. We don't have any plans to quit the Government."

The crisis is the worst to hit Nepal as a new Constitution is yet to be framed, and the old constitution is silent on the appointment of the Army Chief, which was the King's prerogative.

The crisis follows months of tussle between the Prime Minister and the Army Chief over the induction of former Maoist rebels into the Army.

The Maoists have also decided to hold talks with Madhesi People's Rights Forum and other smaller parties to retain majority in the 601-member Constituent Assembly.

Hours after Prachanda sacked Gen. Katawal on Sunday, accusing him of defying the government's orders by reinstating eight Generals retired by the Maoist administration, the President told the Army Chief to remain in the post.

"Being the head of state and the supreme commander of the Nepal Army, I order you to continue with your duty," Mr. Yadav said in a letter sent to Gen Katawal late Sunday night.

Copies of the letter were sent to the Prime Minister's Office and six regional headquarters of the Army.

"The dismissal of the Army Chief and the new appointment do not meet the constitutional requirements and due process," the President said.

Meanwhile, the principal opposition, Nepali Congress, demanded the resignation of Prachanda, saying the Maoist Government has been reduced to a minority in the wake of CPN(UML) pulling out in protest against the decision to sack the Army Chief.

The NC said it would consider supporting the CPN(UML) if it makes a bid to form government.

The President's letter asking Gen Katawal to remain in office also came after 18 political parties urged the President to protect the "constitution and block action against the Army Chief."

Soon after the Government announced its decision to fire the Army Chief yesterday, CPN(UML) quit the government in protest against the decision.

The CPN(UML) has 108 members in the 601-member Constituent Assembly and its action has raised doubts over the survival of the multi-party coalition.

The Maoists' move to fire the Army Chief came a fortnight after they served an ultimatum to Gen. Katawal, seeking his clarification on defiance to recruit former Maoist rebels in the military.

It also questioned his "hastiness" in reinstating eight generals retired by the government and his decision not to participate in the National Games.

Currently, the Maoists have got a strength of 238 seats in the 601 member Constituent Assembly, which is scheduled to meet on Tuesday.

The NC has 112 seats, UML 108, Madhesi People's Rights Forum 53, Terai Madhes Democratic Party 21 and Sadbhavana Party has 9 seats. A minimum of 301 seats are required to form a government.

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