Panneerselvam also wants withdrawal of affidavits submitted to the Election Commission by the Palaniswami faction declaring Sasikala and Dhinakaran as party general secretary and deputy general secretary, respectively.
A top leader of the Panneerselvam camp, K P Munusamy, said their first demand was getting Sasikala and Dhinakaran's resignation and later their formal expulsion along with 30 other members of their family.
There can be a scope for talks to pave the way for merger only if these conditions are met, Munusamy said.
Munusamy suspected "foul play" even in the Palaniswamy camp's decision of April 18 to remove Sasikala and Dhinakaran, a key demand of Panneerselvam.
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"Only your (Palaniswami camp) conscience knows how you did that... Only you (Palaniswami camp) know the reason, (for sidelining Dhinakaran.) 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.
Cadres should be asked to have no truck with them, he said and added that only if this was done, the Panneerselvam camp would regard it as a full victory.
Munusamy also said that only Panneerselvam had the support of the people and the cadres and the rival camp was "afraid" that the majority of MLAs only favoured Panneerselvam for the Chief Minister's post.
He also dubbed Chief Minister Palaniswami as a nominee of jailed leader Sasikala.
AIADMK Rajya Sabha MP R Vaithilingam of the Palaniswami camp rejected Munusamy's allegation on the events leading to Dhinakaran's ouster.
He said the Palaniswami camp had not put forth any conditions for the merger talks and that they would "happily" sit for negotiations considering the party's welfare.
"Respecting the sentiments of 1.5 crore party workers, to redeem the lost 'Two Leaves' party symbol and give good governance for the rest of four-and-a-half years, we will take all (required) steps," he said.
Law Minister C Ve Shanmugam said the party's welfare must be the priority and not "someone's personal whims and fancies."
Munusamy also hit out at senior leader M Thambidurai who had said that Palaniswami would continue as Chief Minister.
Meanwhile, Thambidurai, Deputy Speaker of the Lok Sabha, and minister D Jayakumar separately called on Tamil Nadu Governor Ch Vidyasagar Rao today, but insisted their meetings were not political.