Here are the 10 latest developments in this big story:
Senior AIADMK leader M Thambidurai said 134 of the party's 135 legislators had attended the meeting with Ms Sasikala at Jayalalithaa's Poes Garden residence, and her oath ceremony for the Chief Minister's post will be held soon. The "Caretaker Chief Minister" (Mr Panneerselvam) he said, was a "dummy" and "useless".
As the meeting ended at 1.15 in the morning, Ms Sasikala emerged to wave to her supporters in Ms Jayalalithaa's signature green sari and indicated the opposition DMK was responsible for Mr Panneerselvam's revolt. Mr Panneerselvam has already been removed from the post of the party treasurer -- a decision he has argued with, saying Ms Jayalalithaa had given him the post.
Hundreds of supporters had gathered outside Jayalalithaa's Poes Garden residence, shouting slogans that said Mr Panneerselvam had betrayed the party. Ms Sasikala, 61, draws her power from her indisputable proximity to Ms Jayalalithaa, with whom she lived. When she died, it was Ms Sasikala who performed her last rites.
Undeterred by Ms Sasikala's show of strength, Mr Pannneerselvam has called another press conference in the morning. "Wait and see what happens," he told reporters. The AIADMK will hold another meeting of legislators at 10 am.
Mr Panneerselvam had stunned his party with an unexpected visit at 9 pm to the beachside memorial of J Jayalalithaa, where he meditated with eyes closed. Later, he said that Ms Jayalalithaa had told him while she was sick in hospital that she wanted him to serve as Chief Minister "if anything happened to her."
He also said that he may be persuaded to "withdraw my resignation as Chief Minister if party workers wish", making it clear that he was in full-fledged conflict with Ms Sasikala, whom the AIADMK selected over the weekend as its new Chief Minister.
After his press conference, Mr Panneerselvam met with his supporters at his home. Hundreds of supporters were seen dancing outside the house in a huge show of support and social media was flooded with tweets and memes that greeted him as "Thalaiva", meaning "great leader".
In the morning, Governor Vidyasagar Rao is expected to return to Chennai, where Ms Sasikala is likely to call on him to formally request that she take charge with evidence of her support among legislators.
Earlier in the day, senior AIADMK leader PH Pandian forcefully struck the first public note of dissent by stating that Ms Sasikala does not have the support of cadre. He also alleged that Ms Jayalalithaa had not died a natural death and that she had confided that she was scared of being poisoned. At a press conference on Monday, doctors had said that Ms Jayalalithaa had died of a cardiac arrest.
The Supreme Court will decide next week whether Ms Sasikala had aided Ms Jayalalithaa in amassing a 60-crore fortune illicitly during the early 90s. Their earlier acquittal has been challenged by the Karnataka government. Political opponents have said that the AIADMK should wait till the verdict is delivered before promoting Ms Sasikala to Chief Minister.
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