Giving significant weight to the fact that the petitioner trust was already registered as a “charitable organisation” under Section 12A of the Income Tax Act, the Madras High Court cited Section 52 of the FCRA, which states the same is “in addition to, and not in derogation of” other laws, and concluded that an organisation deemed charitable under tax law cannot cease to be one under the FCRA regime.
The Court noted that Section 11(1) of the FCRA explicitly allows organisations with a “definite cultural, economic, educational, religious or social programme” to receive foreign contributions after obtaining registration. Hence, the Court described the failure to consider the charitable certificate as a non-application of mind by the Revenue Authorities.
A Single Judge Bench of Justice G.R. Swaminathan observed that once the offence of receiving foreign funds without permission was compounded under Section 41 of the FCRA, the contravention could not be used as an adverse ground for rejection. The act of compounding wipes the slate clean, and the authority’s failure to consider this relevant material vitiated its decision.
As regards the violation of natural justice, the Bench explained that the allegation regarding the transfer of funds to another organisation was raised for the first time in the impugned order. The petitioner was never put on notice regarding this charge, which constitutes a clear violation of the principles of natural justice. Furthermore, the order was vague, lacking specific details about the alleged transfer.
As far as disproportionality and legitimate expectation are concerned, the Bench found that disqualifying the applicant for a technical violation that had already been compounded would be disproportionate. It also invoked the principle of legitimate expectation, stating that the authority should have clarified that compounding the offence would not shield the petitioner from disqualification if that was its intention.
The Bench stated that the authority’s conclusion that the petitioner “appears to be religious” was deemed a tentative finding, not a “definite” conclusion as required by the statute. The Bench observed that teaching the Bhagavad Gita, Vedanta, or Yoga does not automatically render an organisation religious. It held that the Bhagavad Gita is a “moral science” and part of India’s composite culture, not confined to a single religion.
Therefore, the Bench set aside the impugned order and remitted the matter back to the second respondent for fresh consideration. The respondent was directed to pass a fresh order within three months after providing the petitioner with a proper, evidence-based notice and an opportunity to respond.
Briefly, the petitioner, Arsha Vidya Parampara Trust, established on June 8, 2017, is engaged in teaching Vedanta, Sanskrit, Hatha Yoga, and preserving ancient manuscripts. The Trust filed an application for registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA) in September 2021, which remained pending for three years. The authorities raised queries concerning the receipt of foreign contribution (FC) amounting to Rs. 9 lacs from a trustee, who is a US national holding an OCI card, without prior permission from the Government of India.
The nature of the association, being listed as “Educational”, while its objectives, including teaching the Bhagavad Gita and Upanishads, appeared to be religious. The petitioner was offered the option to compound the offence of receiving FC without prior permission, which it accepted by paying a sum of Rs. 3.70 lacs. The Ministry of Home Affairs passed an order formally compounding the offence on August 1, 2025. Despite this, the petitioner’s application for registration was rejected, alleging that the petitioner had received foreign contribution funds without prior permission and had also transferred FC funds as a donation to another organisation.
Appearances:
Senior Advocate Sricharan Rangarajan, for the Petitioner
Additional Solicitor General of India, A.R.L. Sundaresan and Deputy Solicitor General of India, K. Govindarajan, for the Respondent
