In a landmark verdict, Nepal's Supreme Court on Monday directed President Bidya Devi Bhandari to appoint Opposition leader and Nepali Congress chief Sher Bahadur Deuba as prime minister by Tuesday and dismissed her "unconstitutional" move to dissolve the House of Representatives for a second time in five months that plunged the country into a major political crisis.

A five-member Constitutional Bench of the Supreme Court led by Chief Justice Cholendra Shumsher Rana pronounced the verdict stating that President Bhandari's decision to dissolve the lower house upon a recommendation of Prime Minister K P Sharma Oli was an "unconstitutional" act, delivering a major blow to the veteran Communist leader who was preparing for snap polls.

The bench issued a mandamus to appoint Deuba as the Prime Minister by Tuesday.

Deuba, 74, has served as the prime minister on four occasions; first from 1995 to 1997, then from 2001 to 2002, again from 2004 to 2005, and from 2017 to 2018. Currently, he is the Leader of the Opposition in the House.

Hours after the apex court's verdict, Nepali Congress (NC) President Deuba held consultations with the alliance partners to form a new government.

The meeting was attended by leaders of the NC, CPN (Maoist Center), Upendra Yadav-led Janata Samajbadi Party (JSP), and Madhav Nepal-led faction of the UML.

The meeting focused on discussing their future course of action including the formation of a new Cabinet. Deuba will take the oath of office and secrecy as the new prime minister of Nepal on Tuesday.

Deuba will have to win the vote of confidence as per Article 76 (4) of the Constitution within 30 days of his appointment.

The apex court in its verdict also ordered summoning a new session of the House of Representatives at 5 PM on July 18.

Chief Justice Rana also said that the bench has concluded that party whip does not apply when lawmakers take part in the voting to elect new Prime Minister as per Article 76(5) of the Constitution.

The bench comprising four other senior most justices -- Dipak Kumar Karki, Mira Khadka, Ishwar Prasad Khatiwada and Dr Ananda Mohan Bhattarai -- had concluded hearings in the case last week.

President Bhandari had dissolved the 275-member lower house for the second time in five months on May 22 at the recommendation of Prime Minister Oli and announced snap elections on November 12 and November 19.

Deuba had staked the claim to form the government as per the Article 76(5) with the support of 149 lawmakers of the 275-member Parliament but President Bhandari had invalidated the claim, along with that made by Oli saying both claims were insufficient.

Last week, the Election Commission had announced the schedule for mid-term elections despite the uncertainty over polls.

Welcoming the apex court verdict, senior leader of the Nepal Communist Party-UML Madhav Kumar Nepal said that the judgement was commendable.

"The Supreme Court has done a commendable job. This has saved the political system that is in place. Since the court has directly asked to appoint Deuba as new prime minister, we have no role to play now," he said.

Under Madhav Nepal's leadership, 23 lawmakers of UML had put their signature in favour of Deuba's claim to the prime ministership.

Madhav Nepal also said that Parliament will now take all the decisions. "Parliament has been reinstated. We will now go to Parliament. All the decisions will be taken from Parliament now," he said. "The court's verdict has also raised moral questions on Oli's actions."

CPN (Maoist Center) Chairman Pushpa Kamal Dahal 'Prachanda' said his focus now will be to make the Deuba-led government a success. Given the numerical strength of the Opposition parties, Deuba will have to secure votes from a section of UML lawmakers to secure requisite majority seats in Parliament.

Meanwhile, Prime Minister Oli's supporters, including youths and students affiliated to the ruling CPN-UML, took to streets here to protest against the apex court's verdict against the 69-year-old Communist leader.

Cadres of the National Youth Force affiliated to CPN -UML gathered in Maitighar Mandal near the court premises chanting slogans against the verdict.

"We are not bound to accept all the orders passed by the Supreme Court, beware!" read a banner carried by the demonstrators.

Oli's confidant and former minister Mahesh Basnet was also present at the protests, according to media reports.

As many as 30 petitions were filed against the dissolution of the House by the President. One of the petitions was filed by the Opposition parties' alliance with the signature of 146 lawmakers demanding reinstatement of the lower house of Parliament and appointment of Deuba as the prime minister.

Nepal plunged into a political crisis on December 20 last year after President Bhandari dissolved the House and announced fresh elections on April 30 and May 10 at the recommendation of Prime Minister Oli, amidst a tussle for power within the ruling Nepal Communist Party (NCP).

On February 23, the apex court reinstated the dissolved House of Representatives, in a setback to embattled Prime Minister Oli who was preparing for snap polls.

Oli, who is currently heading a minority government after losing a trust vote in the House, has repeatedly defended his move to dissolve the House of Representatives, saying some leaders of his party were attempting to form a "parallel government".