Justice Sisira de Abrew delivering a concurring judgment said according to the constitution, the President can not dissolve parliament until the lapse of 4.5 years.
According to Sri Lanka's constitution, President Sirisena, without a two thirds Parliamentary majority can not dissolve Parliament for four and a half years since Parliament, first sat on Sept 1, 2015 following the Parliamentary Election in August 2015.
The court verdict means parliament elections will be held as scheduled after February 2020 and raises the possibility of Wickremesinghe reinstated as prime minister since his coalition enjoys a majority in parliament.
It was not immediately clear if Wednesday's resolution would be accepted by Sirisena who has vowed he will not give the job back to Wickremesinghe.
Sri Lanka has been embroiled in a political turmoil since President Sirisena surprisingly sacked Prime Minister Ranil Wickremesinghe and appointed former president Rajapaksa as the prime minister as well as a new government in late October.
Sirisena dissolved parliament on November 9 when Rajapakse, the man he appointed as prime minister, was unable to prove a majority in the 225-member assembly.
Correspondents say that if the president does not accept the top court's decision, it could lead to impeachment proceedings.
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The bitter power struggle, which Mr. Sirisena maintains is "nothing personal", has left the country without a legitimate government for weeks.
In a Twitter post, the sacked leader said he hoped Sirisena will "promptly respect the judgement of the courts". Sirisena has promised not to reappoint him regardless of analysis that such refusal is against the constitution.
The court said Sirisena could not dissolve parliament before it had completed most of its five-year term. "We are happy that the court has upheld democratic values and shown the world that Parliament is supreme and democracy is really people's rule", he said. The no-confidence votes against Rajapaksa in Sri Lanka's Parliamentary chamber last month descended into chaos, with Rajapaksa supporters occupying the speaker's chair and throwing books and water mixed with chili powder to try to prevent a vote. Credit rating agencies Fitch and Standard & Poor's have downgraded Sri Lanka, citing refinancing risks and an uncertain policy outlook. Allies of Rajapaksa have boycotted parliament and accuse the house speaker of favoring Wickremesinghe.
Also on Monday, a fundamental rights petition was filed against Speaker Karu Jayasuriya accusing him of Contempt of Court by convening Parliament and passing various motions including a motion of no confidence, after the Supreme Court stayed the gazette dissolving Parliament.
However, Rajapaksa continued in office with Sirisena's backing.
LINDA MOTTRAM: There was one politician quoted, Sajith Premadasa, from the United National Party who said that that confidence vote was a historic day, momentous, democracy has triumphed over tyranny.