Chandy was upset because neither he nor the outgoing president Ramesh Chennithala was informed about the decision of the party's national leadership on Sudheeran's candidature.
According to the party source, tempers appeared to have come down after a closed door meeting between Sonia Gandhi, who was on a day-long visit to the state Saturday, and Chandy.
Later, she also met Sudheeran to settle the issue.
Taking a dig at media in the presence of Sonia Gandhi, Chandy at a party convention said Saturday these days his absence is more of news than his presence.
Gandhi publicly made it clear that it is time to rise above the factional feuds.
On the controversy that the chief minister did not receive Sonia Gandhi at the airport on her arrival Saturday, Chandy said he had informed the party president that he was preoccupied with government programmes in three districts.
Gandhi publicly made it clear that it is time to rise above the factional feuds in the party. She also reminded party workers that the only group in the party should be the Congress party.
With Gandhi intervening, all eyes are on Sudheeran on how he takes the party forward with his clean image and no-nonsense approach.
"...if there were some issues between Chandy and Sudheeran and with Gandhi herself playing the peace broker, I feel things will now be smooth between the two," remarked a senior Congress leader who did not wish to be identified.
"The onus is more on Sudheeran than Chandy because the biggest disadvantage for the former is that he is not a practical politician, while the latter (Chandy) is a master at it. The coming days are crucial for both Sudheeran and the party," added the leader.