(1) Where, before the appointed day, the State of Bihar or Uttar Pradesh has made any contract in the exercise of its executive power for any purposes of the State, that contract shall be deemed to have been made in the exercise of the executive power
(a) if such purposes are, as from that day, purposes relatable exclusively to the transferred territories, of the State to which the territories are transferred; and
(b) in any other case, of the State which made the contract, and all rights and liabilities which have accrued, or may accrue, under any such contract shall, to the extent to which they are rights or liabilities of the State which made the contract, be rights or liabilities of the State specified in clause (a) or clause (b) above.
(2) For the purposes of this section, there shall be deemed to be included in the liabilities which have accrued or may accrue under any contract
(a) any liability to satisfy an order or award made by any court or other tribunal in proceedings relating to the contract; and
(b) any liability in respect of expenses incurred in or in connection with any such proceedings.
(3) This section shall have effect subject to the other provisions of this Part relating to the apportionment of liabilities in respect of loans, guarantees and other financial obligations.