The drop in temperature at Hill Stations and Mountains is because of the change in 

ATMOSPHERIC PRESSURE. There is a

relation between PRESSURE and TEMPERATURE. Both Pressure and Temperature vary proportionally. This is what
THERMODYNAMICS says. There are two FACTS why the Hill Stations are COOLER.
1. Drop in Pressure as we climb up the HILL and
2. The Amount of WATER VAPOUR content.

Lets see how the PRESSURE DROP and amount of WATER VAPOUR affect the TEMPERATURE.

The cause of the ATMOSPHERIC PRESSURE will let us know the reason for this fall in Pressure with increase in Altitude. The
word PRESSURE is the extension of the word PRESS. The surface of our EARTH is PRESSED up by the AIR present above the
Surface. We know that AIR has mass and so it is PULLED down to the Surface by GRAVITY. The Weight of the Air acts all
over the Surface and exerts a pressure ( a force). This Pressure is atmospheric Pressure.

Gravity plays an Important role in this. Gravity is maximum at sea level and it decreases when we move up we climb up
the hill, the Gravity decreases so the Atmospheric Pressure decreases. The Drop on Pressure decreases TEMPERATURE. This
is because when the pressure increases, more number of particles or molecules are contained in the space. Every particle
possess some Heat. When the number is more, the heat possessed by all the particles together is more.Also the collisions
between these molecules is more which produces heat.When Pressure decreases, the molecules spread out and so the HEAT
is not concentrated so the TEMPERATURE goes down.

The Atmospheric Pressure is WEIGHT of AIR which is a product of GRAVITY. At sea level, the atmospheric pressure is more
and in a HILL STATION the Atmospheric pressure is comparatively LESS. As Pressure decreases ,the Temperature also
Decreases.

The next FACT is the presence of WATER VAPOUR. Water Vapour constitutes for 36-70% of GREENHOUSE GASES.Water
Vapours absorb heat from the SUN and make the surrounding WARM. This is at GROUND LEVEL. At Higher Altitudes, these
water vapours condense due to decrease in Pressure and form MIST which are suspended water particles. The water vapour
present at HILL STATIONS is LESS so there is less absorption of HEAT from the SUN which prevents the rise of temperature.

My Conclusion is, Temperature don't decrease on climbing up. INSTEAD it can be said that the Atmospheric Temperature
increases towards the Surface of earth because of WATER VAPOUR and other GREENHOUSE GASES.