Where, immediately before the appointed day, the existing State of Madhya Pradesh is liable as guarantor in respect of any liability of a registered co-operative society or other person, that liability of the existing State of Madhya Pradesh shall—
(a) if the area of operations of such society or persons is limited to the territories which, as from that day, are the territories of either of the 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, subject to such financial adjustment as may be agreed upon between the States of Madhya Pradesh and Chhattisgarh or, in default of such agreements, as the Central Government may, by order, direct.