He said in Chennai that the meeting of the ministers was "unofficial" and only those meetings held at the AIADMK office were "official".
Following this, Sukesh Chandrasekhar, Dhinakaran's alleged middleman, was arrested by police for striking a deal of Rs. 50 crore to help the AIADMK faction keep the "two leaves" poll symbol.
Paneerselvam's hard stand came as a rude shock for the ruling faction's ministers and MLAs, who were on board INS Chennai, the warship dedicated to the city, on Tuesday morning.
"We are getting information that since he (Dhinakaran) was entangled in several cases, in order to free him, Sasikala's family has used them (Palaniswami camp)", he claimed. The rival O Panneerselvam camp is also meeting separately here to discuss the future course of action.
Meanwhile, reports emanating from the OPS camp said that they welcomed the decision to sack TTV and Sasikala from the AIADMK party. They have betrayed her. Betrayers have to go, ' Panneerselvam added.
Some AIADMK MLAs have rallied around Dinakaran.
The Panneerselvam faction also urged the state government to send a formal request for a probe by the Central Bureau of Investigation (CBI) in the death of then Chief Minister J Jayalalithaa.
Emerging from the more than an hour-and-half-long meeting held at the residence of Electricity Minister K Thangamani late tonight, Finance Minister D Jayakumar said modalities were being worked out to pave the way for the merger of factions led by Dhinakaran and Panneerselvam.
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The agreements are also causing demographic changes, they say, because those who are displaced are mostly Sunni Muslims. Rebels and residents of Madaya meanwhile waited at the government-held Ramousah bus garage, a few miles away.
Munusamy said since Jayalalithaa has died and Karunanidhi is not active there is a political void in Tamil Nadu and only OPS can fill it. "But if there are elections, Panneerselvam will definitely win".
Senior leader in the VK Sasikala faction and Cooperation Minister, Sellur K Raju, said Chief Minister K Palaniswami has constituted a team of "senior ministers" for the goal. OPS can be both chief minister and AIADMK general secretary, something he will be lobbying for.
Jayakumar also said a committee will be formed to run the party when queried about the General Secretary's position.
The Palanisamy government propped up by Dinakaran so far, has a tenuous majority with 122 MLAs in a Assembly of 234 members.
"There is no opposition to me in the party", he had earlier said.
The problem began when she tried to become Chief Minister.
Only after the merger formalities are completed, can the two factions can approach the EC to unfreeze the symbol.