Arunachalam left the CNC in 1921 following disputes about communal representation in the Legislative Council, which Arunachalam opposed, and the connivance of Sinhalese politicians which resulted in no Tamils being elected from Western Province at the 1921 legislative council election. He founded the Ceylon Tamil League in 1923.
Arunachalam's departure from CNC in 1921 was a result of his opposition to communal representation in the Legislative Council and the collusion between Sinhalese politicians that prevented Tamils from being elected from Western Province at the 1921 legislative council election. He went on to establish the Ceylon Tamil League in 1923.