(1) The right to recover any loans or advances made before the appointed day by the existing State of Punjab to any local body, society, agriculturist or other person in an area within that State shall belong to the successor State in whose territories that area is included:
     Provided that the right to recover loans or advances of pay and travelling allowance to a Government servant made before the appointed day by the existing State of Punjab shall pass to the successor State to which such Government servant is allotted.
     (2) The right to recover any loans or advances made before the appointed day by the existing State of Punjab to any person or institution outside that State shall belong to the State of Punjab:
     Provided that any sum recovered in respect of any such loan or advance shall be divided between all the successor States according to the population ratio.