Sugauli Treaty The Sugauli Treaty ( also spelled Sugowlee and Segqulee ) was signed on 2 December 1815 and ratified by 4 March 1816 between the East India Company and King of Nepal following the Anglo - Nepalese War in the years 1814 - 16 . The signatory for Nepal was Raj Guru Gajaraj Mishra aided by Chandra Shekher Upadhyaya and the signatory for the Company was Lt . Col . Paris Bradshaw . The treaty called for territorial concessions in which parts of Nepal will be given to British India , the establishment of a British representative in Kathmandu , and allowed Britain to recruit Gurkha s for military service . Nepal also lost the right to deploy any American or European employee in its service ( earlier several French commanders had been deployed to train the Nepali army ) . Under the treaty , about one - third of Nepalese territory was lost including all the territories that the King of Nepal had won in wars in the last 25 years or so such as Sikkim in the east , Kumaon Kingdom and Garhwal Kingdom in the west and much of the Terai in the south . Some of the Terai lands were restored to Nepal in 1816 . More Terai lands were restored to Nepal in 1860 to thank Nepal for helping the British to suppress the Indian rebellion of 1857 . The British representative in Kathmandu was the first Westerner allowed to live in the post - Malla Era Nepal . ( It is to be noted that few Christian missionaries operating were deported by the Gurkhas after conquering Nepal during mid 18th century ) . The first representative was Edward Gardner , who was installed at a compound north of Kathmandu . That site is now called Lazimpat and is home to the Indian and British embassies . The Sugauli Treaty was superseded in December 1923 by a " treaty of perpetual peace and friendship , " which upgraded the British resident to an envoy . A separate treaty was signed with India ( independent by now ) in 1950 which restored fresh relations between the two as independent countries . Sugauli treaty and Mithila . In 1816 , East India Company signed a treaty with the Kingdom of Gorkha ( Nepal ) , which led to the end of the two - year - long Anglo - Nepali war . Under this treaty , a part of Mithila was conceded from India to Nepal . This region was popularly called Eastern Terai or Mithila in Nepal . < br > Since the Sugauli Treaty , Nepal holds the control over the Northern parts ( minor portion ) of Mithila , while the Southern Parts ( Major portion ) remain under the control of India . Until the Sugauli Treaty . Until the Sugauli Treaty was signed , the territory of Nepal also included Darjeeling and Tista to the east , Nainital to the south - west and Kumaon Kingdom , Garhwal Kingdom and Bashahar to the west . These areas had been won by Nepal in the last 25 years or so and should have been handed back to Nepal after East India Company ( British Rule ) from India left . Terms of Sugauli Treaty . After the Anglo - Nepalese War , a treaty of peace and friendship was signed between the government of Nepal and the East Company . It was agreed upon on 2 December 1815 by Raj Guru Gajaraj Mishra aided by Chandra Shekher Upadhyaya on behalf of the government of Nepal and Lt . Col . Paris Bradshaw on behalf of the Company . The signed copies of the treaty were exchanged on 4 March 1816 at Makawanpur by Chandra Sekhar Upadhayay and General David Ochterlony . The terms of the treaty were as follows : - DONE at Segowlee , on the 2nd day of December 1815 . PARIS BRADSHAW , LT . - COL . , P . A . Received this treaty from Chunder Seekur Opedeea , Agent on the part of the Rajah of Nipal , in the valley of Muckwaunpoor , at half - past two o ' clock p . m . on the 4th of March 1816 , and delivered to thim the Conterpart Treaty on behalf of the British Government . DD . OCHTERLONY , Agent , Governor - General Memorandum for the approval and acceptance of the Rajah of Nipal , presented on December 8 , 1816 ADVERTING to the amity and confidence subsisting with the Rajah of Nipal , the British Government proposes to suppress as much as possible , the execution of certain Articles in the Treaty of Segowlee , which bear hard upon the Rajah as follows : With a view to gratify the Rajah in a point which he has much at heart , the British Government is willing to restore the Terai ceded to it by the Rajah in the Treaty , to wit , the whole Terai lands lying between the Rivers Coosah and Gunduck , such as appertained to the Rajah before the late disagreement ; excepting the disputed lands in the Zillahs of Tirhoot and Sarun , and excepting such portions of territory as may occur on both sides for the purpose of settling a frontier , upon investigation by the respective Commissioners ; and excepting such lands as may have been given in possession to any one by the British Government upon ascertainment of his rights subsequent to the cession of Terai to the Government . In case the Rajah is desirous of retaining the lands of such ascertained proprietors , they may be exchanged for others , and let it be clearly inderstood that , notwithstanding the considerable extent of the lands in the Zillah of Tirhoot , which have for a long time been a subject of dispute , the settlement made in theyear 1812 of Christ , corresponding with year 1869 of Bikramajeet , shall be taken , and everything else relinquished , that is to say , that the settlement and negotiations , such as occurred at that period , shall in the present case hold good and be established . The British Government is willing likewise to restore the Terai lying between the Rivers Gunduk and Rapti , that is to say , from the River Gunduk to the western limits of the Zillah of Goruckpore , together with Bootwul and Sheeraj , such as appertained to Nipal previous to the disagreements , complete , with the exception of the disputed places in the Terai , and such quantity of ground as may be considered mutually to be requisite for the new boundary . As it is impossible to establish desirable limits between the two States without survey , it will be expedient that Commissioners be appointed on both sides for the purpose of arranging in concert a well defined boundary on the basis of the preceding terms , and of establishing a straight line of frontier , with a view to the distinct separation of the respective territories of the British Government to the south and of Nipal to the north ; and in case any indentations occur to destroy the even tenor of the line , the Commissioners should effect an exchange of lands so interfering on principles of clear reciprocity . And should it occur that the proprietors of lands situated on the mutual frontier , as it may be rectified , whether holding of the British Government of the Rajah of Nipal , should be placed in the condition of subjects to both Governments , with a view to prevent continual dispute and discussion between the two Governments , the respective Commissioners should effect in mutual concurrence and co - operation the exchange of such lands , so as to render them subject to one dominion alone . Whensoever the Terai should be restored , the Rajah of Nipal will cease to require the sum of two lakhs of Rupees per annum , which the British Government agreed to advance for the maintenance of certain Barahdars of his Government . Moreover , the Rajah of Nipal agrees to refrain from prosecuting any inhabitants of the Terai , after its revertance to his rule , on account of having favoured the cause of the British Government during the war , and should any of those persons , excepting the cultivators of the soil , be desirous of quitting their estates , and of retiring within the Company ' s territories , he shall not be liable to hindrance . In the event of the Rajah ' s approving the foregoing terms , the proposed arrangement for the survey and establishment of boundary marks shall be carried into execution , and after the determination in concert , of the boundary line , Sunnuds conformable to the foregoing stipulations , drawn out and sealed by the two States , shall be delivered and accepted on both sides . EDWARD GARDNER Resident Substance of a Letter under the Seal of the Rajah of Nipal , received on December 11 , 1816 After compliments : I have comprehended the document under date the 8th of December 1816 , or 4th of Poos , 1873 Sumbat , which you transmitted relative to the restoration , with a view to my friendship and satisfaction , of the Terai between the Rivers Coosa and Rapti to the southern boundary complete , such as appertained to my estate previous to the war . It mentioned that in the event of my accepting the terms contained in that document , the southern boundary of the Terai should be established as it was held by this Government . I have accordingly agreed to the terms laid down by you , and herewith enclose an instrument of agreement , which may be satisfactory to you . Moreover , it was written in the document transmitted by you , that it should be restored , with the exception of the disputed lands and such portion of land as should , in the opinion of the Commissioners on both sides , occur for the purpose of settling a boundary ; and excepting the lands which , after the cessions of the Terai to the Honourable Company , may have been transferred by it to the ascertained proprietors . My friend , all these matters rest with you , and since it was also written that a view was had to my friendship and satisfactions with respect to certain Articles of the Treaty of Segowlee , which bore hard upon me , and which could be remitted , I am well assured that you have at heart the removal of whatever may tend to my distress , and that you will act in a manner corresponding to the advantage of this State and the increase of the friendly relations subsisting between the two Governments . Moreover I have to acknowledge the receipt of the orders under the red seal of this State , addressed to the officers of Terai between the Rivers Gunduk and Rapti , for the surrender of that Terai , and their retiring from thence , which was given to you at Thankote , according to your request , and which you have now returned for my satisfaction . Substance of a Document under the Red Seal , received from the Durbar , on December 11 , 1816 With regard to friendship and amity , the Government of Nipal agrees to the tenor of the document under date the 8th of December 1816 or 4th Poos 1873 Sumbat which was received by the Durbar from the Honourable Edward Gardner on the part of the Honourable Company , respecting the revertance of the Terai between the Rivers Coosa and Rapti to the former southern boundary , such as appertained to Nipal previous to the war , with exception of the disputed lands . Dated the 7th of Poos 1873 Sumbat In fact , this treaty of Suguali was in favour of the East India Company and Nepal had to suffer a heavy loss of her territory . So , a subsequent agreement was made in December 1816 according to which Nepal got all the low lands ( Terai ) from Mechi , in the east , to Mahakali , in the west . Therefore , the indemnity of two lakhs of rupees ceased to continue . A land survey was also proposed to fix the boundary between the two States . Validity of the Treaty . 1 . Article 9 of the treaty says that the treaty shall be approved by the King of Nepal , but records of the treaty being approved by King Girvan Yuddha Bikram Shah have not been conclusively traced . 2 . The British had feared that Nepal might not implement the treaty signed on March 4 , 1816 by Chandrashekhar Upadhyaya . Therefore , General David Ochterlony , on behalf of the British Government , ratified the treaty the same day and the counterpart treaty was handed over to Upadhyaya . 3 . Some Nepalese nationalists have argued that the treaty was signed between the Nepalese Kingdom and the British and thus " lacks the force to be implemented " between Republic of Nepal and Republic of India . However , the Republic of Nepal has assumed the duties and responsibilities of a successor state with essentially all other treaties signed by the predecessor Kingdom of Nepal , including membership in the United Nations and other comparable relationships . Accordingly , the treaty remains valid since the Republic of Nepal has declared itself to be the legitimate successor state to the prior Kingdom . Alleged Boundary Conflict . As the treaty was not clear about the National delimitation , its effects have persisted even to the present time , as seen by some Nepalese nationalists : 1 . The treaty " failed to mention clearly " in so many sections where the borderline would actually pass through . There have been problems in demarcating the boundary line and in erecting border pillars at several places . Now the area of such disputed places has been estimated at ' " around 60 , 000 hectares " . In many of these areas , there are still claims , counter - claims , discussions , controversies and arguments from both sides . 2 . The result is that even today there are " accusations of encroachment and disputes at 54 places " of the Nepal - India borderline , as reported by Nepalese nationalists . The prominent areas have been identified as Kalapani - Limpiyadhura , Susta , Mechi area , Tanakpur , Sandakpur , Pashupatinagar , Hile Thori etc . 3 . These alleged " conflicts " as India claim in recent context relate entirely to perceived " unfairness " , as seen by many Nepalese nationalists , in those areas . Concomitantly , such observers often point out that the border between Chinese - occupied Tibet and Nepal is " free of disputes " . 4 . The residents of the ' disputed ' areas , which lie within India , are Indian citizens and have never supported calls by Nepalese nationalists for a Revanchist " return " of these areas to Nepal . Accordingly , no renegotiation is expected by neutral observers .