Private television networks have broadcast footage of troops opening fire at unarmed residents.
The shootings come ahead of a visit to the island by the UN rights chief Navi Pillay later this month.
The independent Lawyers Collective on Saturday condemned the crackdown, including live firing, against the protest to demand clean drinking water for thousands of residents of Weliweriya, 20 kilometres (12 miles) northeast of Colombo.
Dipped Products Ltd, a publicly listed company, said Sunday they were not responsible for the pollution at Weliweriya, but were cooperating with environmental tests under way by authorities.
Its factory remains shut because of the protest.
Pillay is due in Colombo on August 25 on a five-day visit in connection with allegations that Sri Lankan troops killed up to 40,000 civilians in the final stages of an ethnic war with Tamil rebels in 2009.
Sri La