KATHMANDU, JUNE 29 The Special Court today ordered the release of former Director General of the Department of Passports (DoP), Tirtha Raj Aryal, on bail of Rs 500,000 in the high-profile e-passport case. A bench comprising Special Court judges Narayan Prasad Paudel, Hemanta Rawal, and Umesh Koirala ordered the accused to post bails bail ranging from Rs 300,000 to Rs 500,000. The court ordered the release of DoP Director Sunil Kumar KC on Rs 400,000 bail. Other officials granted bail include Somesh Thapa and Bipin Prasai, each on Rs 300,000, while Manindra Raj Malla, the Nepal representative of German passport technology company Muehlbauer ID Services GmbH, was released on Rs 500,000 bail. Two Ministry of Foreign Affairs officials, Raja Ram Dahal and Tulsi Acharya, were released without any bail requirement. The court's decision comes as the e-passport controversy increasingly extends beyond corruption allegations into a constitutional, diplomatic and commercial dispute with potentially significant implications for Nepal. The Commission for the Investigation of Abuse of Authority (CIAA) filed corruption charges against officials of the Department of Passports and German companies Veridos GmbH and Muehlbauer ID Services GmbH within a week of concluding its investigation-an unusually rapid timeline for a procurement case of this scale. The filing of the charges has generated widespread debate after critics argued that they relied primarily on circumstantial evidence and questioned whether pressure from advisers within the Prime Minister's Office influenced the CIAA's decision. As the CIAA is a constitutional body mandated to independently investigate corruption, including within the executive branch, the controversy has expanded into a broader debate over constitutional governance and the independence of state institutions. Member of the National Assembly Somnath Portel said the case had raised issues extending well beyond procurement. 'This is no longer simply a passport procurement case. The CIAA is a constitutional body established to independently investigate corruption, including within the executive. If political pressure can influence such an institution to file charges without sufficient evidence, then this becomes a question of constitutional supremacy, the rule of law and the separation of powers.' The Ministry of Foreign Affairs and the Department of Passports have maintained that the allegations remain allegations only and that no findings of wrongdoing have been made. Officials also point out that the implementation of the current e-passport project is not part of the CIAA's indictment. Despite the corruption allegations, Foreign Minister Shishir Khanal has maintained that the German consortium will continue implementing the project according to the agreed schedule despite reported pressure from the Prime Minister's Office to terminate the contract. Government officials familiar with the matter have expressed concern that any unlawful termination of the contract could expose Nepal to international arbitration, resulting in substantial legal costs and financial liabilities potentially amounting to millions of dollars. Senior bureaucrats are also understood to be reluctant to approve any decision that could later expose them to legal or financial accountability. The commercial dispute has also brought renewed attention to French biometric company IDEMIA, which has supplied passport technology to Nepal since 2009, spanning approximately 17 years. After winning Nepal's international tender in 2020 to supply 20 lakh (2 million) e-passports, the company subsequently received a variation order in 2022 increasing the quantity to 28 lakh (2.8 million) passports at a reported unit price of US$10.13 per booklet. The Office of the Auditor General subsequently questioned the pricing of that variation, noting that after the complete e-passport system had already been installed in 2020, the variation involved only the supply of additional passport booklets rather than the complete technological infrastructure. The report questioned why the same unit price continued to apply despite the reduced scope of work. The pricing issue could create a significant commercial dilemma should the contract with the German consortium be terminated and the Department of Passports subsequently be required to execute an additional variation order with IDEMIA. If the variation price is reduced to reflect only the supply of passport booklets, it could reinforce the Office of the Auditor General's earlier observations that the previous pricing was excessive. Conversely, if the existing unit price of US$10.13 per booklet is maintained despite the variation involving only booklet supply, it could prove difficult to justify commercially, particularly when the combined price offered by Veridos and Muehlbauerhas been reported at approximately US$8.70 per passport booklet. Some observers argue that the present controversy reflects a broader commercial rivalry that intensified after IDEMIA lost the subsequent international tender, suggesting that decision-makers within the government may have been influenced by representations made by an unsuccessful bidder. Those claims remain contested and have not been established by any court. The broader controversy has nevertheless raised concerns about Nepal's procurement framework and investment climate. Any perception that state institutions are being used to facilitate the termination of a lawfully awarded international contract in favour of a competing bidder could undermine investor confidence, expose Nepal to international legal disputes and damage the country's reputation as a reliable destination for foreign investment. With constitutional, diplomatic and commercial questions continuing to emerge alongside the corruption allegations, the e-passport case is increasingly being viewed as a test of Nepal's commitment to the rule of law, institutional independence and the integrity of its public procurement system.