By Sudeshna Sarkar 

Kathmandu, May 29 (IANS) After holding an anxious nation hostage for over a day, Nepal's beleaguered Prime Minister Jhala Nath Khanal finally agreed Sunday to step down in exchange for the three major parties signing a deal to extend the constitutional deadline by three more months, a step that constitutional lawyers warned was illegal and would plunge the republic into further crises.Nepal's interim constitution and parliament faced dissolution at Saturday midnight after the bickering parties failed to draft a new constitution in three years, a task started in 2008 and regarded as the foundation of the peace accord that saw the Maoist guerrillas lay down arms after a decade of insurgency.

There was a sense of dejà vu as the three largest parties - Khanal's communist party, his ally the Maoists, and the opposition Nepali Congress - wasted the past one year fighting for power and began feverish negotiations to avert the constitutional meltdown only at the 11th hour.

While angry citizens demonstrated outside parliament, asking the nearly 600 lawmakers either to come up with the new constitution or return the salaries and perks they had drawn for three years, the unheeding three parties continued to fight, causing parliament to sit 15 hours behind the scheduled time of 8 a.m.

The main bones of contention were the Nepali Congress' demand that the Maoists hand over to the government the weapons of their guerrilla army and the prime minister step down as the price for having come to power by forging a secret deal with the Maoists in February.

The Maoists refused to part with the arms of their People's Liberation Army (PLA).

"We are not ready to surrender the arms we obtained through the blood and sweat of our martyred comrades," said Maoist chief Pushpa Kamal Dahal Prachanda.

Finally, at 4 a.m. Sunday, the feuding parties signed a five-point agreement that allowed the prime minister to amend the interim constitution for the ninth time and allow three more months to draft a new constitution and complete the peace process.

The agreement says the peace process will be completed by Aug 28, including deciding the fate of the PLA with its nearly 20,000 fighters.

It also says the prime minister will quit to pave the way for a new national, consensus government; the first draft of the new constitution will be made public by Aug 28; and the Nepal Army, once comprised of the elite classes, will be made more inclusive.

It also says all past agreements inked with the regional parties from the Terai plains will be implemented.

Earlier, Khanal had sought an extra year. But it was rejected due to intense public anger at the delay and a recent ruling by the Supreme Court that called all extensions of the constitution deadline illegal and unconstitutional.

Parliament chairman Subash Nembang, who proved unable to impose parliamentary norms, said more than two-third of the MPs endorsed the extension. There were 504 votes for it and only four against.

The lone dissenting voice was raised by the royalist Rastriya Prajatantra Party Nepal, the only party in parliament seeking the restoration of the monarchy the house abolished in 2008, and the reinstatement of a Hindu state in the now secular republic.

Royalists demanded the dissolution of parliament since it had failed to promulgate a new constitution by May 28 midnight and asked for fresh elections. However, the proposal was defeated by overwhelming majority.

Though Nepal averted a constitutional meltdown for now, there are indications that the turbulent republic is heading for further upheavals.

A lawyer, who filed a writ in Supreme Court last week saying parliament should be deemed dis-solved from May 28 midnight, said he would challenge the extension.

"The parties have raped the constitution and law," said Bharat Jangam.

"They disregarded the Supreme Court's ruling last week that parliament's term can't be extended any more. I will fight the fresh extension to the end."

The reprieved government will also face a tough time from the Terai parties, whose demands are likely to trigger a nationwide debate.

The regional parties, among other things, are now calling for 10,000 people from the plains to be recruited in the army when the army says it will not accept any politically motivated en masse induction.

The additional three months are likely to be frittered away on more power fights instead of drafting the new constitution.

Though the Nepali Congress and the Terai parties want Khanal to step down immediately, the prime minister's political advisor Prakash Jwala indicated Sunday that the premier will not quit till all the parties had agreed on a new government.

Last year, Khanal's predecessor Madhav Kumar Nepal had to promise under similar circumstances to step down so as to get the approval of the MPs for an extension of the constitutional deadline.

But subsequently, it took the warring parties seven months and 17 rounds of elections to pick Khanal as the new premier and parliament was able to sit only for 95 minutes in 12 months to draft the new constitution.