Section 121(1) in The U.P. Municipalities Act, 1916
(1)When, by reason of a notification under Section 3, any local area ceases to be [transitional area or a smaller urban area, as the case may be,] [Substituted by U.P. Act No. 12 of 1994.] and is immediately placed under the control of some other local authority, the municipal fund and property vesting in the [Municipality] [Substituted by U.P. Act No. 12 of 1994.] shall vest in such other local authority and the liabilities of the [Municipality] [Substituted by U.P. Act No. 12 of 1994.] shall be transferred to such other local authority.
