(1) When any local area in which Act 20 of 1856 (An Act to make better provision for the appointment and maintenance of Police Chaukidars in Cities, Towns, Stations, Suburbs and Bazars in the Presidency of Fort William in Bengal) is in force is included in any local area over which a district board established under this Act has authority, the Local Government may, by notification, direct that that Act shall cease to be in force in the local area BO included, and that every panchayat constituted under that Act for that local area shall cease to exist.
     (2) When a direction is issued under this section in respect of any local area in. which the said Act 20 of 1856 is in force, the amount, if any, then available under section 36 of that Act for purposes of improvement in that local area shall be expended therein by the Deputy Commissioner for such purposes.