(1) When, by a notification under section 4, any local area forming part of a cantonment ceases to be under the control of a particular Board and is immediately placed under the control of some other local authority, such portion of the cantonment fund or the cantonment development fund and other property vesting in the Board and such portion of the liabilities of the Board, as the Central Government may, by general or special order, direct, shall be transferred to that other local authority.

(2)When, in like manner, any local area forming part of a cantonment ceases to be under the control of a particular Board and is not immediately placed under the control of some other local authority; such portion of the cantonment fund or the cantonment development fund and other property vesting in the Board shall vest in the Central Government, and such portion of the liabilities of the Board shall be transferred to that Government, as the Central Government may, by general or special order, direct.