Lieutenant Commander K. A. Dayananda was taken before a magistrate and remanded in custody over the double murder, which investigators believe took place in January 2009.

Police said the victims, both from the Tamil minority group, were kidnapped by naval officers and later killed despite their families paying a ransom for their release.

"The vehicle of the two victims was taken to Welisara navy camp on the pretext that it contained a bomb," a police official told AFP.

"Later, they dismantled the vehicle and sold the parts after having killed the two men."

Sri Lanka is investigating the disappearance and presumed murder of 11 young men between 2008 and 2009 in the dying days of the 37-year civil war between government forces and Tamil separatists.

Several navy officers are currently on bail in connection with the alleged disappearances. The missing men are believed to have been murdered before the brutal conflict ended in 2009.

Senior military figures and close associates of former strongman president Mahinda Rajapakse have been accused of murders, cover-ups and extortion during his decade of rule.

Several intelligence officers have also been released on bail for charges related to the assassination of a prominent newspaper editor and attacks on other journalists and dissidents.

The January 2009 killing of journalist Lasantha Wickrematunga, a fierce critic of then-president Rajapakse, sparked international outcry and shone a light on human rights violations in Sri Lanka.

Wickrematunga had accused Rajapakse's defence secretary and brother Gotabhaya of taking kickbacks in arms purchases, and was due to testify in court when he was murdered.

Gotabhaya Rajapakse has denied running death squads.

The Rajapakses are under investigation for large-scale financial fraud and murder during Mahinda's presidency, which ended in 2015.