359. Effect of absorption of ¹ [Panchayat area into smaller urban area].--

(1)-Notwithstanding anything contained in this Act, if any local area ceases to be a ¹ [panchayat area by virtue of a notification under section 4 of the Karnataka Panchayat Raj Act, 1993] (hereinafter in this section referred to as the said local area), and is absorbed in a ¹ [smaller urban area] the following consequences shall ensue, namely:--

(a) the unexpended balance of the ¹ [Grama Panchayat Fund] and the property (including arrears of rates, taxes and fees) ² [belonging to the ¹ [Grama Panchayat]] of the said local area (hereinafter referred to as the panchayat) and all rights and powers which prior to such notification, vested in the panchayat shall, subject to all charges and liabilities affecting the same, vest in the municipal council of such ¹ [smaller urban area] (herein referred to as the municipal council) as the municipal fund;

(b) any appointment, notification, notice, tax, order, scheme, licence, permission, rule, bye-law or form, made, issued, imposed or granted under the ¹ [Karnataka Panchayat Raj Act, 1993], immediately before the said date in respect of the said local area shall continue in force and be deemed to have been made, issued, imposed or granted in respect of such ¹ [smaller urban area] until it is superseded or modified by any appointment, notification, notice, tax, order, scheme, licence, permission, rule, bye-law or form, made, issued, imposed or granted under this Act;

(c) all budget estimates, assessments, assessment lists, valuations or measurements, made or authenticated under the ¹ [Karnataka Panchayat Raj Act, 1993], immediately before the said date in respect of the said local area shall be deemed to have been made or authenticated under this Act;

(d) all debts and obligations incurred and all contracts made by or on behalf of the panchayat immediately before the said date and subsisting and on the said date shall be deemed to have been incurred and made by the municipal council in exercise of the powers conferred on it by this Act;

(e) all officers and servants in the employ of the panchayat immediately before the said date shall be officers and servants of the municipal council under this Act and shall, until other provision is made in accordance with the provisions of this Act, receive salaries and allowances and be subject to the conditions of service to which they were entitled or subject on such date:

Provided that it shall be competent to the municipal council, subject to the previous sanction of the Government, to discontinue the services of any officer or servant, who, in its opinion, is not necessary or suitable to the requirements of the municipal service after giving such officer or servant such notice as is required to be given by the terms of his employment and every officer or servant whose services are disposed with shall be entitled to such leave, pension, provident fund and gratuity as he would have been entitled to take or receive on being invalided out of service as if the panchayat, in the employ of which he was, had not ceased to exist;

(f) all proceedings pending at the said date before the panchayat shall be deemed to be transferred to and continued by the municipal council;

(g) all appeals pending before any authority shall, so far as may be practicable, be disposed of as if the said local area had been included in the ¹ [smaller urban area] when they were filed;

(h) all prosecutions instituted by or on behalf of the panchayat and all suits or other legal proceedings instituted by or against the panchayat or any officer of the panchayat pending at the said date shall be continued by or against the municipal council as if the said local area had been included in the ¹ [smaller urban area] when such prosecutions, suits or proceedings were instituted;

(i) all arrears of rates, taxes and fees, vesting in the municipal council shall, notwithstanding that such rates, taxes, and fees cannot be levied under this Act, be recoverable in the same manner as a tax recoverable under Chapter VII;

(j) until the reconstitution of the municipal council in accordance with the provisions of this Act, notwithstanding anything to the contrary contained in this Act, one person ordinarily resident in the local area absorbed in the ¹ [smaller urban area] who is nominated by the Government shall be an additional councillor of the municipal council.

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1. Substituted by Act 36 of 1994 w.e.f. 1.6.1994.

2. Substituted by Act 33 of 1986 w.e.f. 7.10.1986.