Political situation in Nepal and bilateral issues of mutual concern figured in talks between Prime Minister Madhav Kumar Nepal and Indian Ambassador Rakesh Sood in Kathmandu. Mr. Sood called on the Prime Minister at his office in Singhdurbar yesterday. The meeting is being seen by observers as significant as it took place at a time when the ruling alliance and main opposition Unified CPN-Maoist have locked horns over the issue of Mr. Nepal's resignation. Maoists have demanded that the Prime Minister quit immediately and warned of serious consequences if he did not pave the way for formation of a national consensus government. However, the Nepali Congress-CPN(UML) alliance has asked the Maoists to first reach an agreement on completion of the peace process and drafting of the Constitution before forming a national consensus government. A senior Cabinet colleague of Nepal yesterday said the Prime Minister was ready to step down if peace and Constitution-drafting were guaranteed by the former rebels. He said, unless the Maoists abandon the attitude of capturing power through weapons, peace and Constitution cannot be guaranteed.