Chapter II CONSTITUTION OF MUNICIPALITIES

1. (1) The Governor shall, by notification, constitute--
   • (a) a Nagar Panchayat for a transitional area, that is to say, an area in transition from a rural area to an urban area;
   • (b) a Municipal Council for a smaller urban area; and
   • (c) a Municipal Corporation for a larger urban area, in accordance with the provisions of this Act: Provided that a municipality under this section may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment in that area and such other factors as it may deem fit, by notification, specify to be an industrial township. Explanation.--In this section, "a transitional area", "a smaller urban area" or "a larger urban area" means such areas as the Governor may, having regard to the population of the area, the density of the population therein, the revenue generated for local administration, the percentage of employment in nonagricultural activities, the economic importance or such other factors as it may deem fit, specify by notification for the purposes of this Act.
2. (2) Notwithstanding anything contained in sub-section (1), any local area, except in Scheduled Area, which was declared as a small town or a municipality under the Manipur Municipalities Act, 1976 (Manipur Act 26 of 1976), before the commencement of this Act, shall be deemed to have been declared as a transitional area or a smaller urban area, as the case may be, for the purpose of this Act.
3. (3) Before issue of notification under sub-section (1) a draft of the notification is to be published indicating local limits of the area to be included or excluded from the municipality.
4. (4) Any person who is ordinarily resident of the local area in respect of which the draft notification has been published under sub-section (3) may, object to the proposal contained in such notification in writing to the Deputy Commissioner within forty-five days from the date of publication of the said draft notification.
5. (5) On receipt of the objection under sub-section (4), the Deputy Commissioner shall within forty-five days of the receipt of objection forward the same with his comments to the Government for its consideration.

1. (1) When a local area is excluded from a municipality by a notification under sub-section (1) of section 3, and is included in the other local authority the Government shall frame a scheme determining what portion of the balance of the municipal fund and all other property vested in that municipality, shall, on such exclusion, vest--
   • (i) when such area is included within the limits of any other local authority, in such authority; and
   • (ii) in any other case, in the Government and in what manner the liability of the municipality shall be apportioned between the municipality and such local authority or the Government, as the case may be, and on the publication of such a scheme in the Official Gazette, such property and liability shall vest and be apportioned accordingly: Provided that before framing of any such scheme, the Government shall consult the municipality and where the area is included within the limits of any local authority, such authority also.
2. (2) All money due to the municipality, immediately before the date of such exclusion on account of tax, toll, fee, rate or otherwise may in respect of the areas so excluded be recovered by the municipality as if such area has not been excluded.

Every municipality shall cause to be erected and set up and maintain boundary marks defining the limits of the area subject to its authority as set out by the notification.