(1)There shall be constituted :-(a)a Municipal Council for a smaller urban area; and(b)a Nagar Panchayat for a transitional area, that is to say, an area in transition from a rural area to an urban area:Provided that a Municipal Council or a Nagar Panchayat as the case may be, may not be constituted in such urban area or part thereof as the Governor may, having regard to the size of the area and the municipal services being provided or proposed to be provided by an industrial establishment or a group of such establishments in that area and such other factors as he may deem fit, by public notification specify to be an industrial township :Provided further that when an area is notified to be a transitional area, the Gram panchayat having jurisdiction over such area shall continue to function until a duly elected Nagar Panchayat is constituted under this Act.
