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This research paper is based on development of clusters by configuring peers in Peer-to-Peer (P2P) overlay networks in a heterogeneous environment. This heterogeneity is on the basis of difference in nodes physical parameters, such as storage space, RAM, processor cycle and processor cores etc. Heterogeneous cluster-based Newscast protocol (HCNP) is used to develop clusters on the basis of multiple physical parameters. An Integral Capability Level (ICL) is assigned to the node carrying multiple physical parameters, which represents the overall capability of heterogeneous nodes in the network. All possible combinations of physical parameters associated to a node are handled in such a way that an efficient and scalable cluster-based overlay topology is maintained, which easily resolves the problem of collaboration among heterogeneous nodes in a P2P overlay network.