The Nepalese Foreign Ministry in Kathmandu said its "serious attention" was drawn to the report that appeared in Pakistan's 'The News', which quoted a Lahore-based lawyer as claiming that Kasab was arrested here by Indian police with the help of Nepalese security personnel in 2006.
The report in the Pakistani daily was "illusive, baseless and fictitious and it was published with a view to damaging Nepal's image," the ministry said in a statement.
"The ministry hereby refutes the news report in the strongest term and states Ajmal Kasab was neither arrested in Nepal nor was he handed over to any other country," it said.
Meanwhile, Nepal's Ambassador [Images] to Pakistan Bala B Kunwar told a news conference in Islamabad [Images] that report about the arrest or kidnapping of Kasab in his country were "baseless and concocted".
Kunwar said an inquiry had established that Iman had never lived or was arrested in Nepal before 2006.
"Nepal as a sovereign and responsible state has always adhered to its stated policy of not allowing its territory to be used against the interest of other countries," he said.
Kunwar said the news report about Iman's arrest was "aimed at denting Nepal-Pakistan relations".
He added he was confident that such charges would have no impact on the friendly ties between the two countries.
A Pakistani lawyer named C M Farooque had claimed this week that Kasab was arrested two years ago in Kathmandu by "Indian agencies" with the help of Nepali authorities. He claimed Kasab was on a "business visit" when he was arrested.
Farooque told the Pakistani media that he had filed an application in Nepal's Supreme Court for seeking Iman's release and claimed the court had sought a reply from Nepali authorities and the Indian High Commission in Kathmandu. His claims were subsequently rejected by Nepal's interior ministry.
His claim was rejected by the Nepalese court officials, who said Farooqi had filed a case for the release of two other Pakistani nationals, not Kasab, and later the court had dismissed the case as he had failed to follow its proceedings.
Kunwar made it clear that he was not addressing the news conference due to pressure from India but only because his country had been "dragged" into a controversy.
He also pointed out that there is no counter-terrorism treaty between India and Nepal though there is an extradition treaty that only applied to nationals of the two countries.
Answering a question, Nepalese Ambassador said there are a number of Pakistanis in Nepal's jails while a number of Nepalese were in Pakistani jails though he did not have the exact number of prisoners.
The ambassador said Nepal's policy of issuing visas on arrival for Pakistanis would not be changed or altered. He said the Nepalese government will extend full cooperation and assistance to Kasab's lawyer in finding out the facts.
"The embassy of Nepal wants to say loud and clear that... Ajmal Amir Kasab [Images] was neither arrested in Nepal nor handed over to any other country," said a statement later issued by the mission.
The news reports about Iman's arrest in Nepal were "put out with a design to malign the image of Nepal".
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