The commission appointed in pursuance of section 40:62-109 of this title or by virtue of an agreement as provided for in section 40:62-129 of this title, may sell any part of the property in its charge not needed for public use, and may also sell to any municipality the distributing system of mains therein and enter into a contract to supply water in quantity to the municipality purchasing such distributing system, but no distributing system shall be sold to any municipality without the consent of the governing bodies of the municipalities owning the same having at least two-thirds of the population of all such municipalities. The proceeds of any sale of any part of the property or of any distributing system or part thereof, shall be used and applied only in payment of the principal of the unpaid bonds, if any, theretofore issued for the acquisition or enlargement or extension of the waterworks.