The seven-member judge bench unanimously in a verdict on Thursday observed that it was illegal to dissolve Parliament before its four and half year term limit.
Following the verdict, efforts are being taken to form the new government.
President Maithripala Sirisena in a meeting with his MPs last evening is reported to have said that a new Cabinet would be sworn in and a new government will be formed by next Monday.
It is not immediately clear whether ousted Prime Minister Ranil Wickremesinghe will regain his post.
Reacting to the apex court verdict, Mr. Wickremsinghe said he hopes the President will accept the judgment.
On the other hand, Mr. Rajapksa side they will continue their fight for holding early elections.