In 1922 a section of Ananda College was moved to Campbell Place, Colombo on a proposal made by Mr P. de. S. Kularathna, a leading Buddhist Educationist of the time. Mr L. H. Meththananda was placed as Principal of this institution which was called as Ananda branch. Mr.W..E. Fernando was the Headmaster and Most Venerable Balangoda Ananda Maitreya Thero became its first Buddhist teacher.
In 1924. Mr P. de. S. Kularathna has spent Rs. 5,500/= to purchase a quarter acre of land close to the Campbell place playground and built 16 classrooms for the new school. Governor Gregory Thompson laid the foundation stone for a building to have 16 classrooms. Out of 16 class rooms he has used two rooms for the Principal's office and staff members another two rooms for the Laboratories and balance 12 rooms for the classes. Three Hundred and thirty students of Ananda were transferred under Mr L. H. Mettananda in 1924.
Mr P.de. S Kularathna was the Chief person in all these activities was instrumental in getting the institution registered as a separate school on 1 November 1925. The new school was given its motto Apadana Sobhini Panna , and the school name NALANDA also proposed by Ven. Balangoda Ananda Maitreya Thero . The English and the Sinhala versions are Character Illumines Wisdom and Yahapath Charithayen Praggnawa Opanangwe respectively. Ven. Balangoda Ananda Maitreya Thero has selected this motto from the "Anguttara Nikaya, Tika Nipatha, Bala Waggo Lakkana Sutta.
On 1 January 1926 Mr P.de.S. Kularathna has appointed Dr. Gunapala Malalasekara as Principal of the Nalanda College and transferred Mr. L.H. Meththanada to Ananda College as Vice Principal. Nalanda was fortunate in having its second principal the renowned scholar Prof. Gunapala Malalasekera. Later Prof Gunapala Malalasekara set about his duties with much enthusiasm and launched several projects. He made plans for the collection of funds for the construction of buildings, later commenced a bulletin titled "NALANDA". Also arranged 15 minutes Buddhist talk at the daily students assembly and took many steps to promote the Buddhist environment in the school.
Mr P. de S. Kularathna has laid the foundation stone for second building on 30 March 1926. End of 1926 Nalanda students were increased to 550. Later he has borrowed money from Anagarika Dharmapala. to purchase a land for primary section which was settled by Dr. Gunapala Malalasekara. The College student assembly hall is named Malalasekera Theatre after him.