In a dramatic development, the Ministry of Home Affairs (MHA) on Tuesday held an important meeting with Development Commissioner Raajiv Yaduvanshi in New Delhi in his capacity as Finance Secretary of Puducherry, ignoring the transfer order of the Puducherry government.

The meeting assumes significance in the background of the ongoing tussle between the Puducherry government and the MHA, which has recently directed the former to take immediate action on letter sent by Union Home Minister Sushil Kumar Shinde to Chief Minister N. Rangasamy asking him to reinstate Mr. Yaduvanshi as Finance Secretary.

While confirming the participation of Mr. Yauvanshi in the New Delhi meeting on Tuesday, highly-placed sources said the communication (about the meeting) was sent only to Mr. Yaduvanshi, ignoring W.V.R. Murthy , who has been appointed as the Finance Secretary by the Rangasamy-led government in the place of Mr. Yaduvanshi.

The New Delhi meeting discussed the acute financial crisis faced by the Puducherry government, which was finding it extremely difficult to pay salary to the government employees or pass bills. Besides, it also discussed the factors that led to the current crisis, sources said.

In a related development, Mr. Murthy, who was earlier scheduled to attend the meeting “in his capacity” as Finance Secretary of Puducherry in New Delhi, cancelled the trip at the last moment to avoid trouble, sources add.

Meanwhile, Mr. Rangasamy, under pressure from the Union Home Ministry, held a meeting with Chief Secretary M. Sathiyavathy, who returned to Puducherry after an official tour to Mahe, on Monday, as the file moved by the Puducherry government on reinstating Mr. Yaduvanshi is with the Chief Minister’s Office for his clearance. Mr. Murthy was also present at the meeting.

Sources said the discussion centred around the MHA’s stand on transfer order issue and persistent pressure from the top officials in New Delhi on Puducherry government to reverse its order. All aspects of the MHA’s directive, repercussions and solutions to the issue were discussed at this high-level meeting which also charted out the basic framework for the 2013-14 budget to be presented at the Territorial Assembly in March.

It has been decided that Mr. Murthy would continue to engage in pre-budget preparation and a final decision would be taken after the return of Lieutenant Governor Iqbal Singh, who is in New Delhi to attend a Governors’ conference, government sources said. Mr. Singh, who will have to approve the transfer file, is expected to reach Puducherry on Friday.