(1) The Government may, by notification, abolish any municipal area, declared under section 4.
(2) When a notification is issued under this section in respect of any municipal area, this Act and all notifications, rules, bye-laws, orders, directions and powers issued, made or conferred under this Act shall cease to apply to the said municipal area ; the balance of the municipal fund and all other property at the time of the issue of the notification vested in the municipality shall vest in the Government and the liabilities of the municipality shall be transferred to the Government.
(3) Where any municipal area is abolished under sub-section (1) and subsequently the area comprising the municipal area so abolished is declared to be a Halqa under clause (j) of sub-section (1) of section 2 of the Jammu and Kashmir Panchayati Raj Act, 1989, the assets and liabilities referred to in sub-section (2) shall vest in the Halqa Panchayat of the Halqa from the date of its establishment under sub-section (1) of section 4 of the Jammu and Kashmir Panchayati Raj Act, 1989.
Explanation.–– For the purposes of this sub-section, the assets shall include all arrears of [fee], toll, cesses, rates, dues and fees imposed under this Act or rule or any bye-law which fell due to the municipality of the municipal area immediately before the date of its abolition and the same shall be recoverable by the Director Urban Local Bodies.