(1) Subject to the provisions of this Act and such rules as may be prescribed, the municipal fund and all property held by or vested in the municipal council under this Act, shall be applied, for the purposes specified in sections 87, 88 and 91 and for all other purposes for which by or under this Act, or any other law for the time being in force, powers are conferred or duties imposed upon the municipal council, and with the previous sanction of the Commissioner or the Government, for any other purposes for which the application of such property or fund is in public interest.

(2) Notwithstanding anything contained in sub-section (1) any officer dulyauthorised by it in this behalf, -

(a) incur expenditure beyond the said limits, --

(i) in the acquisition of land, or

(ii) in the construction, maintenance, repair or purchase of works for the purpose of obtaining supply of water required for the inhabitants of the ¹ [municipal area], or of providing the supply of electrical energy for the use of the inhabitants of the said ¹ [municipal area] or of establishing slaughter houses or places for the disposal of night soil or sewage or carcasses of animals beyond the said limits, or for drainage works or for the purpose of providing mechanically propelled transport facilities for conveyance of the public or for the purpose of setting up of dairies or farms for the supply, distribution and processing of milk or milk products for the benefit of the inhabitants of the ¹ [municipal area], or for any other purpose calculated to promote the health, safety or convenience of the inhabitants of the said ¹ [municipal area]; or

(b) make whether within or beyond the limits of the ¹ [municipal area] a contribution towards expenditure incurred by any other municipal council or a ¹ [Taluk Panchayat or a Grama Panchayat or cantonment authority] or other public institution or person or body of persons for measures promoting the health, education or convenience of the public and calculated to benefit the residents within the limits of the contributing municipal council; or

(c) create scholarships tenable outside the limits of the ¹ [municipal area].

(3) Nothing in this section, or in any other provision of this Act, shall be deemed to make it unlawful for a municipal council when with the sanction of the Government it has constructed works beyond the limits of the said ¹ [municipal area] for the supply of water or electrical energy or for drainage as aforesaid, --

(a) to supply or extend to, or for the benefit of, any person or buildings or lands in any place whether such place is or is not within the limits of the said ¹ [municipal area], any quantity of water or electrical energy not required for the purpose of this Act within the said ¹ [municipal area], of the advantages afforded by the system of such drainage works on such terms and conditions, with regard to payment and to the continuance of such supply or advantages, as shall be settled by agreement between the municipal council and such person or the occupier or owner of such buildings or lands, or

(b) to incur any expenditure, on such terms with regard to payment as may be settled as aforesaid, for the construction, maintenance, repair or alteration of any connection pipes or any electric supply lines or other works necessary for the purpose of such supply or for the extension of such advantages.

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