"There can be no dialogue with Sasikala's family in the picture...the party should not be in the hands of one family," said OPS, accusing the jailed AIADMK chief and her nephew TTV Dinakaran of "making mistake after mistake" and urging the Palaniswamy faction to dump them.
The camps of OPS and the Chief Minister - known as EPS - are likely to meet to work out a reconciliation formula. In these negotiations, Ms Sasikala appears to be at a disadvantage just months after she pulled off a victory of sorts in her tussle for power with OPS, by installing EPS as Chief Minister and her nephew as the party's number two. Since then, Mr Dinakaran has been named in various corruption scandals.
"There will be talks on a patch-up or merger only if they agree to abide by the principles of MGR (AIADMK founder MG Ramachandran) and Jayalalithaa," Mr Panneerselvam said.
The mild-mannered 66-year-old, a lifelong Jayalalithaa loyalist who was always her preferred stand-in for Chief Minister when she was forced to step down, made it clear that Sasikala cannot have any role in the party.
"MGR didn't let family play any active role in the party," he said.
The EPS camp, say sources, has offered a formula that will allow him to stay Chief Minister with Mr Paneerselvam as party general secretary. But the OPS faction has reportedly made it clear that he should be both and Mr Palaniswamy should settle for the role of deputy.
Ms Sasikala's group has 122 legislators; it is the faction of the AIADMK that is in power. Mr Panneerselvam's group, however, claims it is the true inheritor of Jayalalithaa's legacy and deserves to keep the party and its "two-leaf" symbol.
Mr Panneerselvam has repeated his demand for a CBI investigation into the death of Jayalalithaa in December; he is among the AIADMK leaders who have raised questions about the cause of her death.