The programme was held in Bellary in the absence of the CM, who had earlier stated that this should be a state government initiative and not one by the Reddy brothers, who have decided to construct the houses at an estimated cost of Rs 500 crore.
The Reddy brothers had stated that they would bear the expenses and they did not need the state government's assistance.
All through Tuesday, the CM made several attempts to patch up things. However, his efforts failed with the Reddy brothers announcing that they would go ahead with the programme in Bellary without the CM.
The battle for north Karnataka?
Bharatiya Janata Party insiders told rediff.com that this battle is not just about construction of houses. The Reddy brothers want to emerge as the messiahs of north Karnataka and hence want to construct the houses.
However, Yeddyurappa is unhappy with this decision since north Karnataka is his stronghold and the Lingayat community -- from which he hails from -- is in a majority.
The BJP sources also said that the party won the previous elections thanks to Yeddyurappa's 'magic' in north Karnataka, and he is not willing to sacrifice his position to the Reddy brothers.
The visibly upset CM, however, decided to assert himself differently on Wednesday morning. Prior to the foundation laying ceremony in Bellary, he ordered the transfer of the superintendent of police, the deputy commissioner and the conservator of forests of Bellary.
Party sources said that there was no meaning behind these transfers, but the CM wanted to show the Reddy brothers as to who is the boss.
The BJP says that the Reddy brothers want to make it seem as though they want to topple Yeddyurappa. However, the reality is that they want to increase their bargaining capacity with the CM and want sops for their mining business.
This is not the first time that the BJP in Karnataka is in such a situation. The Reddy brothers and the CM have been at loggerheads at least five times since the government was formed over a year ago.
The BP says that the Reddy faction have 18 MLAs on their side. They would desperately look to pocket the Speaker, Jagadish Shettar, and get him to resign, so that the heat is on Yeddyurappa.
If Shettar were to resign and join the Reddy brothers, then it would spell trouble for the CM. Shettar is capable of drawing a large chunk of MLAs on his side. The Reddy brothers also see Shettar as a possible candidate for the post of CM. However, Shettar decided to stay away from this mess and instead visited Mysore on some work. Despite being invited to Bellary, he chose not to make it.
Jaitley to intervene
This deadlock is expected to end later during the day when senior BJP leader, Arun Jaitley, will visit Bengaluru. He is expected to play the mediator between the two warring factions later on Wednesday.