Delhi Set-up had recommended that a fresh law governing NDMC should be passed by the Parliament for proper organization and functioning of the New Delhi Municipal Council. Consequent upon enforcement of Constitution (Seventy Fourth Amendment) Act, several provisions in Punjab Municipal Act, 1911 had to be brought in tune with Part IXA of the Constitution before 31st May, 1994. Furthermore, there were several major differences between various functional regimes prescribed under the old law governing NDMC in comparison to the Delhi Municipal Corporation Act, 1957. It was generally recognized that there was need for a greater measure of commonality in the procedure adopted by the Municipal Corporation of Delhi and the New Delhi Municipal Council in matters relating to taxation, revenue, budgeting, contracts, accounts and audits, streets and sanitation, public health, public safety and suppression of nuisances etc.
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