Liability in respect of actionable wrong.

Where, immediately before the appointed day, the existing State of Punjab is subject to any liability in respect of an actionable wrong other than breach of contract, that liability shall,—

1. (a) if the cause of action arose wholly within the territories which on and from that day are the territories of one of the successor States, be a liability of that successor State; and
2. (b) in any other case, be initially a liability of the State of Punjab, but subject to such financial adjustment as may be agreed upon between all the successor States concerned, or in default of such agreement, as the Central Government may by order direct.