Section 3 in The Himachal Pradesh Municipal Corporation Act, 1994
3. Classification of municipalities.
(1)There shall be constituted three classes of municipalities in accordance with the provisions of this section as specified below : -(i)"Nagar Panchayat" for a transitional area with population exceeding two thousand and generating annual revenue exceeding rupees five lakhs for the local administration;(ii)"Municipal Council" for a smaller urban area with population exceeding five thousand and generating the annual revenue exceeding rupees [ten] [Substituted for the words 'twenty' vide Act No. 20 of 2007.] lakhs for the local administration;(iii)"Municipal Corporation" for a larger urban area with population exceeding fifty thousand and generating annual revenue exceeding rupees two crores for the local administration and which has been declared to be a municipal area under section 3 of the Himachal Pradesh Municipal Corporation Act, 1994 (12 of 1994) :Provided that a municipality under this section may not be constituted in such urban areas or part thereof as the State Government may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment in that area and such other factors as it may deem fit, by notification, specify to be an industrial township:Provided further that no cantonment or part of a cantonment shall form part of a municipality.Explanation. - In this sub-section, " a transitional area", "a smaller urban area" or "a larger urban area" means such area as the State Government may, having regard to the population of the area, the density of the population therein, the revenue generated for local administration, the percentage of employment in non-agricultural activities, the economic importance or such other factors as the State Government may deem fit, specify, by notification for the purpose of this section.(2)The State Government shall, by notification, constitute the municipalities and specify the class to which a municipality shall belong in accordance with the provisions of this section after observing the procedure as laid down in section 4:Provided that the municipalities existing at the commencement of this Act and listed as Nagar Panchayat or as Municipal Council in the Schedule to this Act, would be deemed to have been constituted and notified as such, under and in accordance with the provisions of this section:Provided further that the State Government may, after giving a reasonable notice of not less than thirty days of its intention to do so, amend the schedule, by notification and declare any Nagar Panchayat as a Municipal Council or any Municipal Council as a Nagar Panchayat.
