The Madras High Court has upheld the rejection of an application for registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA), holding that organisations seeking foreign contributions must correctly disclose their religious character and activities, as reported in LiveLaw.
A Division Bench comprising Justice GR Swaminathan and Justice MD Sumathi made the observation while dismissing an appeal filed by Kanzeon Public Charitable Trust, which runs a Montessori School and a Zen Meditation Centre at Kodaikanal.
The trust had challenged an order passed by the Deputy Director (FCRA), Ministry of Home Affairs, rejecting its application for FCRA registration.
FCRA Form Requires Organisations To Declare Their Nature
The Court noted that Form FC-3A under the FCRA Rules requires an applicant to disclose the nature of its organisation, including whether it is religious, cultural, economic, educational or social.
If the organisation is religious, the applicant must also indicate whether it falls under the Hindu, Sikh, Muslim, Christian, Buddhist or “others” category.
The dispute arose after the trust claimed that its activities were not religious in nature.
The trust argued that its Zen Meditation Centre was based on the Dhyana tradition of India and that its activities could not therefore be classified as religious.
The Court, however, noted that the trust itself claimed to subscribe to Zen Buddhist philosophy and that Zen Buddhism is a variant of the Mahayana Buddhist school.
“The appellant trust claims to subscribe to Zen Buddhist philosophy… The authority rightly states that Zen Buddhism is a variant of Mahayana Buddhist School… Applying the same logic, every Buddhist school will come under the broad umbrella of Buddhism. Zen can be no exception. Since the appellant’s application did not correctly identify its nature as religious, the application was rightly negatived,” the Court said.
Religious Organisations Can Apply For FCRA Registration
The Bench clarified that the FCRA does not prevent a religious organisation from applying for registration.
Instead, the Court held that such an organisation must make a complete disclosure of its religious character and programme.
“The appellant need not have been so coy. Section 12 of the FCRA bars only an unregistered religious organisation from accepting foreign contribution. An organisation having a definite religious program is entitled to apply for a certificate of registration from the central government under Sections 11 and 12 of the Act. But one has to make a clean breast of everything. One cannot keep any card up one’s sleeve. This is no game of hide and seek,” it added.
The Court therefore distinguished between being a religious organisation and being ineligible for FCRA registration.
According to the judgment, religious character by itself does not prevent an organisation from seeking registration. The issue in the present case was the failure to correctly disclose that character in the application.
Not Every Organisation Teaching Indian Philosophy Is Religious
The Bench also drew a distinction between religious institutions and organisations engaged in education or cultural activities involving Indian philosophical traditions.
It observed “An organisation primarily engaged in the systematic teaching of Vedanta, the Bhagavad Gita, the Upanishads, Yoga and allied Indian Knowledge Systems through structured classes, residential courses, publications, research and preservation of manuscripts cannot to be classified as religious institutions.”
The Court said that Indian Knowledge Systems would fall under the category of education or culture.
It also noted that the National Educational Policy, 2020 recognises these disciplines as legitimate fields of study.
Wide Discretion Given To FCRA Authority
The Court further held that considerable leeway and discretion should be given to the authority while deciding applications under Sections 11 and 12 of the FCRA.
“We hold that considerable leeway and unfettered discretion should be given to the authority in the matter of granting or refusing registration under Sections 11 and 12 of the FCRA, 2010. Of course, if the discretion is perversely exercised or the relevant materials are not taken into account or there is non-application of mind, the rejection order would certainly be interfered with by the writ court in exercise of the power of judicial review. Such an approach was adopted in Arsha Vidya Parampara Trust v. UOI (2025 SCC Online Mad 13781). We approve the ratio laid down therein,” the court said.
Thus, while the FCRA authority has broad discretion, the Court made clear that its decision can still be interfered with where the discretion is exercised perversely, relevant material is ignored or there is non-application of mind.
No Right To Receive Foreign Contributions
The Court also observed that receiving foreign aid is not a right.
It held that since an organisation does not have a right to receive foreign contributions, the decision of the FCRA authority would not be examined against an excessively high threshold.
In the case before it, the Bench found that the trust had failed to correctly disclose its religious nature while seeking registration.
The Court consequently upheld the Deputy Director’s decision and dismissed the appeal filed by Kanzeon Public Charitable Trust.
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