Arunachalam was born on 14 September 1853 in Colombo in south western Ceylon in a Tamil family.

[1][2][3] He was the son of Gate Mudaliyar A. Ponnambalam, a leading government functionary, and Sellachi Ammai.

[1][2][5] After school he joined Christ's College, Cambridge in 1871 on a scholarship, graduating in 1874 with BA degree in law and history.

[1][8][9] They had three sons (Padmanabha, Mahadeva and Ramanathan) and five daughters (Maheswari, Manonmani, Sivanandam, Pathmavathy and Sunthari).

[1][3][7] He wanted to start a career in law but was persuaded by his maternal uncle Muthu Coomaraswamy to join the civil service.

[3][10] Thereafter he held numerous posts within the civil service: police court in Kandy; police magistrate and commissioner of requests at Kalpitiya, Puttalam, Matara, Avissawella, Pasyala, Matale, Kalutara and Colombo; and district judge in Chilaw, Kegalle, Kalutara, Batticaloa and Kurunegala.

[3][10][11] Early on his career, Arunachalam's quality of work was noticed by Chief Justice John Budd Phear who recommended him to the Governor and Secretary of State.

[1][4][7][19] Arunachalam left the CNC in 1921 following disputes about communal representation in the Legislative Council, which Arunachalam opposed, and the connivance of Sinhalese politicians which resulted in no Tamils being elected from Western Province at the 1921 legislative council election.