(1) If at any time it appears to the District Collector, that a Gram Panchayat has made default in performing any function or discharging any duty imposed by or under this Act, or any relevant law for the time being in force, the District Collector may, by order in writing fix a period for performing such function. If the Gram Panchayat fails to perform such function within the stipulated period, the Gram Panchayat shall be liable for dissolution by the Government.
In such an event, the District Collector shall submit a report to the Government recommending dissolution of the Gram Panchayat and the Government may pass appropriate orders.
(2) If such function or duty is not performed or discharged by the Gram Panchayat within the period so fixed, the District Collector may appoint some person to perform that function or discharge that duty and may direct that the expense incurred in that regard shall be paid by the person having the custody of the Gram Panchayat Fund, in priority to any other charges against such fund except charges for the service of authorized loans.