"I think AIADMK should behave... As a responsible political party and follow process which is democratic and acceptable to people of Tamil Nadu. What they have done, what report I get, is unacceptable to most people of Tamil Nadu," Chidambaram said in an interview to India Today news channel.
Sasikala is expected to be sworn in as Chief Minister of the state on Tuesday.
Meanwhile, a PIL was filed in the Supreme Court seeking to restrain the swearing-in of Sasikala on Tuesday.
"And I cannot imagine, how a party wedded to social justice, wedded to social reform can elect a leader whom they have elected and present leader as a harbinger of change," the former Union finance minister, who hails from Tamil Nadu, said.
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He further said there is "complete disconnect" between AIADMK party MLAs and people of Tamil Nadu and the "disconnect" will become more visible as days go by.
On whether it would be correct on part of the governor to swear in Sasikala as Chief Minister when cases are pending against her, Chidambaram said the governor has a discretion.
On Sunday, Sasikala was elected AIADMK Legislature Party Leader by its MLAs, paving the way for her elevation to the top post.