Where, immediately before the appointed day, the existing State of Madhya Pradesh is subject to any liability in respect of any actionable wrong other than breach of contract, that liability shall,—
         (a) if the cause of action arose wholly within the territories which, as from that day, are the territories of either of the successor States of Madhya Pradesh or Chhattisgarh, be a liability of that successor State; and
         (b) in any other case, be initially a liability of the State of Madhya Pradesh, but subject to such financial adjustment as may be agreed upon between the States of Madhya Pradesh and Chhattisgarh or, in default of such agreement, as the Central Government may, by order, direct.