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Chennai is the oldest municipality of India which dates back to 1688 (St. George was the protagonist). some website have Mussoorie as the place but this is very unlikely that the Britishers would have skipped rest of India and would have choosen Musoorie as the place.
Reference: http://books.Google.com/books?id=Fk8FQa2ZSFQC&pg=PA936&lpg=PA936&dq=%22oldest+Municipality+in+India%22&source=bl&ots=3NfhaAO-QC&sig=Spy_w67QBjDhXpQU4qpsGuxwpAc&hl=en&ei=Ydr_SYi9I4nhtgfv99GFBw&sa=X&oi=book_result&ct=result&resnum=9
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