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(52) 'rural areas' means the areas of Delhi which immediately before the establishment of the corporation are situated within the local limits of the District Board of Delhi established under the Punjab District Boards Act, 1883 (Punjab Act XX of 1883), but shall not include such portion thereof as may, by virtue of a notification under Section 507, ceases to be included in the rural areas as herein defined;

There is also definition of 'urban areas' as per Clause (61) which only reads that urban areas are meant to be the areas of Delhi which are not rural areas. Section 3(1) of the Municipal Corporation Act reads as follows:

3(1) With effect from such date as the Central Government, may, by notification in the Official Gazette appoint, there shall be a Corporation charged with the municipal Government of Delhi, to be known as the Municipal Corporation of Delhi.
[Emphasis supplied] Sub-section (2) of Section 3 contemplates rural areas committee and their functions. Section 41(1) envisages that the Municipal Government of Delhi shall vest in the Corporation. The functions of the Corporation are enumerated in Section 42 and from a reading of these provisions, it is clear that the Corporation is entrusted with the task of providing wholesome water, medical facilities, such as sanitation, establishment and maintenance of hospitals, dispensaries, the establishment and maintenance of and aid to schools for primary education. The task of collecting property tax is also entrusted to the Municipal Corporation as per provisions of Section 144 of the Act. Corporation has also the power to collect the general tax on lands and buildings within the rural areas. Transfers in regard to properties are also to be dealt with by the Corporation under Section 147 of the Act. The Public Streets vest in the Corporation. There are, however, special provisions regarding the rural areas and they are contained in Section 507 of the Municipal Corporation Act. Clause (a) of Section 507 reads as follows:

13. There may be a little doubt as to how the same area can have two local self-governments. In fact, it is so. If we carefully analyse the provisions of the Delhi Municipal Corporation Act as also the Gram Panchayat Raj Act, what we find is that the essential features of local self-government is embodied so far as the rural areas are concerned. Their local self-government is within the jurisdiction of the Gram Panchayat. Though the provisions of the Municipal Corporation Act are extended in the sense that it is applicable to the entire territory of Delhi, the essential features of local self-government insofar as rural areas are concerned, are absent. Undoubtedly some of the taxes like property tax, are to be collected by the Municipal Corporation but we find from the provisions of Section 507(c) that the Corporation shall pay the proceeds of the taxes to the Gaon Sabha. In other words, Municipal Corporation is collecting the taxes on behalf of the Gaon Sabha but technically the power to collect the taxes is vested with the Municipal Corporation. Various other powers and duties in regard to rural areas, especially so far as they relate to the local self-government are kept intact and they are vested in the Gram Panchayat under the Gram Panchayat Raj Act. It is, therefore, clear to our mind that insofar as the rural areas are concerned, which have their own local self-government and which do not fall within the category of a municipality, Section 2(14)(iii)(a) has no application. The moment the lands in the rural area are urbanised in exercise of the powers vested in the Corporation under Section 507(a), the provisions of Section 2(14)(iii) would be immediately applicable to those areas as those areas will be outside the rural local self-government and they come within the purview of urban local self-government, namely, Delhi Municipal Corporation. In this connection, it may be necessary to refer to item (b) of Section 2(14)(iii). Perhaps Mr. Vidyalankar is right that so far as Union territory of Delhi is concerned, those provisions would be hardly applicable. Item (6) provides that upto 8 kilometres from the limits of municipality any lands can be treated as capital assets having regard to its urbanisation, etc. This power is vested with the Government, namely, Centre. The same Central Government has the authority under Section 507(a) of the Municipal Corporation Act to declare any portion of a rural area as an urban area. The moment the power is exercised under Section 507(a), the need for notification under Section 2(14)(iii)(b) would not arise. Similarly the moment the Central Government feels that a particular area within 8 kilometers of the limits of the municipality has to be treated as an urban area, the need for exercise of power under Section 507(a) would also cease. Thus two provisions are in a way complimentary to each other and at times overlap.

As pointed out by the Appellate Assistant Commissioner, the word 'place' Nangal Dewat has its own Panchayat which is governed by the Panchayat Act. He has also pointed out that the census reports of 1961 and 1971 have separately recorded the population of the village as an urnbanised area. While no doubt the provisions of Delhi Municipal Corporation Act were applicable to this area also, since for the purposes of the said Act the word 'Delhi' has been defined in Section 2(10) as the entire area of the Union territory of Delhi except New Delhi and Delhi Cantonment, it has been pointed out that no declaration has been issued in regard to this village under Section 507 of the Delhi Municipal Corporation Act. For all these reasons the authorities have held that the village retains its administrative individuality and that since its population was less than 10,000 at the relevant time, the provisions for exemption in Section 5(1)(iva) and (b) would be applicable.