(1) Subject to rules, if any, that may be made under this Act, and regard being had to the fact that the Metropolitan Authority itself provides in the area within the jurisdiction of any local authority or any of the amenities which the local authority provides, then the Authority shall not be liable to local authority to arrive at an agreement with the Authority to receive a lumpsum contribution to the local authority in lieu of all or any of the taxes levied or services rendered by the local authority.
(2) Where no such agreement as is referred to in sub-section (1) can be reached, the matter may be referred to the State Government in such manner as the State Government may determine, and the State Government may, after giving to the local authority or the Authority or both, a reasonable opportunity of being heard, decide the amount of such contribution. The decision of the State Government shall be binding on both parties.