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Gravity plays an Important role in this. Gravity is maximum at sea level and it decreases when we move up.As 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 reason 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 gorund 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.