The panchayat system was undemocratic and leaders were intolerant towards opposition. The leaders devoted themselves not to the development of the country and people but to their personal interests and benefits. Some the people went against it and demanded for a change in the government. Many ups and downs took place in the country. Finally, realizing the gravity of the situation, late king Birendra decided on Jestha 18, 2036 to hold a referendum in the country. A referendum is a system by which an issue is decided by popular vote. A referendum was to be helps on the issue whether the people prefer reformed Panchayat system or multi party system. The king's declaration eased the situation and was praised by prominent leaders of the democracy and a step forward towards the restoration of democracy. After 2007 B.S. the referendum was held on Bishakh 20, 2037 B.S. and the result was declared on 1st of Jestha 2037 B.S. The reformed Panchayat system was won by a thin majority. The supporters of the multiparty system blamed the government of rigging.