(1) If whole of the Sabha areas is included in a municipality, all rights, obligations, property, assets and liabilities, if any, whether arising out of any contract or otherwise shall vest in the municipality.
(2) If any village, sub-village or patti thereof, wherein immovable property is located is excluded from the Sabha area and included in the limits of municipality, the immovable property of the transferred area of that Gram Sabha may be transferred to the municipality and either the municipality or the Government shall pay to the Gram Panchayat concerned such compensation in lieu of immovable property, not lesser than the market values, as may be determined by the Government or the officer authorised by it, in this behalf. In case of income generating assets transferred to the municipality, the municipality shall continue to pay 50% of the net income accrued from such assets or more as may be determined by the Government, or the officer authorised by it to the Gram Panchayat.