"I hand over the INLD and the spectacles (party symbol) to my younger brother as a gift," Ajay Chautala, who was recently expelled from the party, told supporters in Jind.
The elder brother had termed his event as a meeting of the party's state executive, a move which the other faction said was illegal.
Abhay Chautala held a party workers meeting in Chandigarh, where he hit out at his brother, saying those who staked claim over the party have themselves left.
Ajay Chautala, who is facing a 10-year jail term along with father Om Prakash Chautala since 2013 in a teachers recruitment scam, said the new party will hold a rally in Jind on December 9.
He is currently on a two-week parole.