Effect of exclusion of local area from municipal area

When a local area is excluded from a municipal area under section 7- (a) this Act and all notifications, rules, bye-laws, orders, directions and powers issued, made or conferred under this Act, shall cease to apply thereto ; and (b) the State Government shall after consulting the municipality, frame a scheme determining what portion of the balance of the municipal fund and other property vesting in the municipality shall vest in the State Government and in what manner the liabilities of the municipality shall be apportioned between the municipality and the State Government, and, on the scheme being notified, the property and liabilities shall vest and be apportioned accordingly.