(1) If at any time it appears to the Government or the prescribed authority that a municipality is persistently making the default in the performance of the duties imposed on it by or under this Act or under any other law for the time being in force, or exceeds or abuses its powers or fails to carry out any order of the Government or the competent authority, the Government or the prescribed authority may, after such enquiry as it may deem fit, by an order dissolve such municipality and may order a fresh constitution thereof.
(2) No order under sub-section (1) shall be passed unless reasonable opportunity has been given to the municipality for furnishing its explanation. The notice calling explanation shall be addressed to the President of the municipality and shall be served in the manner prescribed. The reply of the municipality to the notice shall be supported by the resolution of the municipality.
(3) On dissolution of municipality under sub-section (1), the following consequences shall ensure, namely:––
(a) all the members, President and Vice-President shall vacate their offices with effect from the date of such order ;
(b) all powers and duties of the municipality shall, until the municipality is re-constituted, be exercised and performed by such person or committee of persons as the Government or the prescribed authority may appoint in this behalf and where a committee of persons is so appointed, the Government or the prescribed authority shall also appoint a head of such committee ; and
(c) where a committee is appointed under clause (b), any member of such committee duly authorised by it may issue or institute or defend any action at law on behalf of or against the municipality.
(4) Any person appointed to exercise and perform the powers and duties of municipality during the period of dissolution may receive from the fund of the municipality concerned such payment for his service as the Government may, by order, determine.
(5) A municipality dissolved under sub-section (1) shall be reconstituted in accordance with the provisions of this Act within six months of its dissolution. Such re-constituted municipality shall function for the remaining term of the municipality :
Provided that if the un-expired period is less than six months the municipality shall not be re-constituted for this period.