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He was elected as the Congress Legislature Party (CLP) leader at a meeting of party MLAs in Pondicherry on Friday.
Rengaswamy will succeed P Shanmugam, who had submitted his resignation to Lt Governor Dr Rajni Rai on Friday morning.
Rengaswamy, PWD minister in the Shanmugam ministry, was elected as CLP leader as the Congress high command had decided that only an MLA should be elected CLP leader, party general secretary Ghulam Nabi Azad said.
The name of former chief minister V Vaithialingam was not considered as he was yet to be cleared by a court in a case filed by the CBI, Azad said.
Outgoing chief minister Shanmugam was present at the CLP meeting.
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