This happened thousands of times in the U.S. at all tiers of government, but especially at the local (municipal or city) levels where laws are more easily circumvented. Can we apply in Nepal as well?

Even in the U.S. in the 19th century, democracy worked to the excessive advantage of a privileged group, but gradually it was reformed so that the people at the bottom gained some share. It appears that neither of these conditions has been carried out in Nepal. 
And also, In the concluding half of the 19th century in the U.S., excessive wealth and power concentration associated with industrial development resulted in many bloody work stoppages and strikes that ultimately were reduced pressure applied to the government that produced labor law changes consequently, a more equal distribution of U.S. wealth among its citizens. This is not occurring in Nepal.

If these labor reforms had not taken place, then war might have split out between the rich and poor classes and U.S. democracy would have been threatened. The slavery issue was the most pregnant and bloody and almost resulted in the U.S. becoming two countries.
Financial democracy requires cooperation among the government representatives of the people to get things accomplished that are useful to the masses rather than the representatives themselves. 
When representatives are immobile because they cannot agree on courses of action to facilitate each other's constituent and/or they are selfish and care more about their individual wealth rather than the wealth of the people in general, then the nation will continue to be poor.
If Democracy brought increased wealth to select people associated with the legislators and not the entire population, it is not surprising that it would be replaced by another form of government. It is a familiar scene experienced by democracies everywhere from time to time.