It is the oldest part of the town famous for wood-carving and the Dattatraya Temple. The temple is claimed to be built out of trunk from a single tree by King Yaksha Malla in 1427 AD. The three storied pagoda style temple stands tall despite of the natural disasters, adorned with incredible wood carved panels. Besides the temple is the Pujari Math exhibiting the notable Peacock Window with beautiful carving. It is one of the signature attractions of this site.