Chief Judge of Malaya Justice Arifin Zakaria, who led the three member bench, struck out the villagers' second leave application and allowed a preliminary objection by landowner Koperasi Pegawai Kerajaan Negeri Pulau Pinang Bhd and developer Numestro Venture Sdn Bhd.
Ariffin also ordered the villagers to pay costs.
The villagers were represented by Darshan Singh Khaira and P Uthayakumar.
Some 50 villagers were at the apex court to hear the verdict.
Nusmetro was represented Shareen Abdul Manan while Karin Lai acted for the Koperasi.
The 45 families had named Koperasi Pegawai Kerajaan, Numestro Venture and Pentadbir Tanah Daerah Timur Laut Pulau Pinang as respondents in the action.
They are seeking a stay of execution of the bailiff's order to demolish the nearly 200-year-old Indian traditional village, popularly known as High Chaparral located in Bukit Gelugor.
The application was filed on July 31 and was fixed for hearing today by Federal Court senior assistant registrar Surita Budin in Kuala Lumpur.
Today, their counsel raised the issue of locus standi (legal standing) of the villagers in bringing the action against Koperasi Pegawai Kerajaan and Numestro Venture.
Locus standi not raised earlier
However, Ariffin in his decision today, ruled that the issue of locus standi (legal standing) to institute legal proceedings against the cooperative and the developer could not be raised at the apex court because it was never raised before at the lower courts.
He said the residents could have raised the title issue before the previous Federal Court panel on June 26, but had failed to do so.
"Therefore, they cannot raise it now," Arifin said.
Following the apex court's decision, the villagers must now have to vacate their houses.
The developer had last week agreed to postpone the demolition of the houses to Sept 1.
The decision to postpone the demolition came after an hour-long meeting between Numesto's executive director Thomas Chan, the court bailiff, the villagers and George Town police chief Azam Abd Hamid.
The negotiation took place in a mobile police beat parked near the village main entrance.
Today's leave application was the second application.
The Federal Court had on June 26, before a panel led by Justice Augustine Paul, also dismissed the application.
They were appealing against a Court of Appeal ruling on May 11 that declared the residents trespassers on the settlement and were ordered to vacate the land.
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