The Scottish Refugee Council has warned that a two-tier system of housing rights is emerging after a legal bid to prevent failed asylum seekers being evicted without a court order was dismissed by Scotland’s highest court.

The case against the Home Office and Serco was launched last August, after the private housing provider started to implement controversial plans to change the locks on the accommodation of hundreds of asylum seekers who had been told they could not stay in the UK.

Glasgow city council called on the Home Office to intervene on three occasions, stating that making hundreds of vulnerable individuals destitute could spark a humanitarian crisis on the streets, and Serco was eventually forced to pause the evictions while the court case was ongoing.

The court of session ruling, published on Friday, centred around the legality of Serco’s lock change procedures, which the company described as its “Move On Protocol”, under Scottish housing law and human rights legislation.

But in a 29-page opinion by Lord Tyre, the judge concluded: “I am satisfied that neither of the pursuers has made out a relevant case for any of the orders sought.”

Responding to the ruling, Graham O’Neill, policy officer at the Scottish Refugee Council, said: “People in Scotland are protected from summary eviction and immediate homelessness under mainstream Scots housing law. But today’s ruling states that a whole group of men and women are outside this protection, denying them the same rights as everyone else in Scotland.”

Although Serco has said that it will not be taking immediate action as a result of Friday’s ruling, O’Neill said that “serious and urgent” consideration must now be given to providing emergency accommodation for the 300 people previously threatened with eviction. He added that the council-led partnership board, which was set up in the wake of the lock change row to oversee the Home Office and its contractors in Glasgow and is the first of its kind in the UK, must ensure that they act “transparently and humanely”.

“We know who these people are and their vulnerabilities, they have been living in limbo, which has had a detrimental effect on their mental health, and are relying on food banks. Destitution is not an inevitable outcome of seeking refugee protection. It is a brutal and avoidable Home Office policy.”

Govan Law Centre, which brought the case in the name of a Kurdish Iraqi national, Shakar Ali, and a Kurdish Iranian national, Lana Rashidi, said that its clients were “very disappointed” with the judgment, and would now take time to consider their options.

Julia Rogers, managing director of Serco’s immigration business, welcomed the “clarity” of the decision, adding: “Serco will not be taking any immediate action as a consequence of this decision, but will now discuss with the Home Office, Glasgow city council and our other partners how best to proceed, given that there continues to be a very significant number of people in Glasgow whose claim for asylum has been refused by the UK government and who are continuing to receive the benefit of free accommodation, paid for by Serco, some for months, even years.”

Asylum groups have also expressed concern that Serco will be under pressure to “offload” failed asylum seekers before the company’s contract to deliver asylum accommodation in Scotland comes to an end and the new company, the Mears Group, takes over.

The Scottish government’s communities secretary, Aileen Campbell, said that the new accommodation contract presented “the perfect opportunity” to find a sustainable long-term solution to the problem, adding: “It is not acceptable that the current asylum system results in people being left destitute and homeless in the country where they have sought refuge.”

A Home Office spokesperson said that it “takes the wellbeing of asylum seekers and the local communities in which they live extremely seriously”.