End of Direct Rule
Mysteriously, the agreement between the parties and King under Indian supervision was not honored by the parties. It is widely believed that the then Prime Minister Girija Prasad saw an opportunity to become the first president of Nepal by declaring Nepal a republic state. On 10 June 2006, the Parliament scrapped the major powers of the King, including his right to veto laws. This ended the idea of a "King in Parliament", and he was reduced to a figurehead, though for a time he continued to offer felicitations and to receive diplomats. According to Article 167 of the constitution, all executive powers as well as those enjoyed by the King in the previous Constitution were now vested in the prime minister. All powers of the 239-year-old monarchy were stripped, making King Gyanendra a civilian king.
Prime Minister Girija Prasad Koirala, who previously supported the continuation of the monarchy, said in March, 2007 that he thought the King should step down. In June, Koirala repeated his call for King Gyanendra to abdicate in favour of his grandson Prince Hridayendra.
On 23 August 2007 Nepal's transitional government nationalised all the properties King Gyanendra inherited from his brother including the Narayanhity Royal Palace. The move did not affect the properties he owned before his accession to the throne.
Read more about this topic: Gyanendra Of Nepal
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