Sharif had been convicted and sentenced to life imprisonment for refusing to allow Musharraf's plane to land in Karachi in October 1999.
He had subsequently struck a deal with the Musharraf regime that enabled him and his family to move to Jeddah in Saudi Arabia.
Though the party had reposed faith in Sharif's leadership, the deposed prime minister nominated his brother Shahbaz Sharif to head the PML (N) to save it from being disqualified by the military regime.
The nomination of Shahbaz, former chief minister of Punjab province, was in compliance with a new law promulgated by the military regime, which makes fresh party elections mandatory in order to qualify for the October 10 parliamentary polls.
Pakistan's new electoral laws also bar political parties, which elect convicted persons as their leaders.
The move comes as an apparent setback to the efforts of Pakistan Peoples Party leader Benazir Bhutto as she was expecting Nawaz Sharif to continue as the PML (N) chief and both parties to jointly defy the military regime.
Bhutto was recently re-elected as her party's chairperson in defiance of the new electoral laws as she too has been convicted, in a corruption case.
Going by the new laws laid down by Musharraf, both Nawaz Sharif and Benazir Bhutto are ineligible to contest the elections.
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