Compounding a violation under the FCRA Act rectifies the applicant's status, and vague basis for rejection violates principles of natural justice.

ORDER :

G.R. Swaminathan, J.

The petitioner is a trust established on 08.06.2017. The founders are the disciples of Swami Dayananda Saraswati of Arsha Vidya Gurukalam, Coimbatore. The petitioner is engaged in teaching and training students from around the world, for spreading knowledge of Vedanta along with Sanskrit language, teaching Hatha Yoga and yoga philosophy and also digitizing and preserving ancient manuscripts.

2.The petitioner applied to the second respondent for registration under the Foreign Contribution (Regulation) Act, 2010 . The application was not processed for three years. In October 2024, certain queries were raised. There was exchange of correspondence between the parties. The petitioner submitted a fresh application in Form FC-3A on 27.01.2025. Clarifications were sought. The petitioner responded to them. However, the application seeking grant of registration was rejected vide order dated 08.09.2025 by the second respondent. Assailing the same, this writ petition has been filed.

3.The learned Senior Counsel appearing for the petitioner reiterated all the contentions set out in the affidavit filed in support of the writ petition. He called upon this Court to set aside the impugned order and grant relief as prayed for.

4.Per contra, the learned Additional Solicitor General of India for the Madras High Court assisted by the Deputy Solicitor General of India submitted that the impugned order is well reasoned. He pointed out that the petitioner, having contravened the provisions of the FCRA , is not entitled to obtain registration. His core contention is that registration under is not a matter of right. The learned Additional Solicitor General pointed out that the issue has larger ramifications. He highlighted that several NGOs are receiving foreign funds and there is a national security angle also. He was of course fair enough to state that the petitioner is not sought to be tarred with the same brush. His emphasis was more on the importance of subjecting any application to strict scrutiny. When an application falls sought of the high threshold, it is liable to be rejected. He called upon this Court to sustain the impugned order and dismiss the writ petition.

5.I carefully considered the rival contentions and went through the materials on record.

6.It is not in dispute that the trust deed dated 08.06.2017 whereby the petitioner was established was registered as Document No. 73 of 2017. The petitioner-trust was also registered under Section 12A of the Income Tax Act, 1961 pursuant to the order dated 15.02.2021 passed by the Income Tax Appellate Tribunal, C Bench, Chennai in ITA No.2589/Chny/2018. The petitioner submitted an application for registration under the Foreign Contribution (Regulation) Act also in September, 2021. The application was kept pending for three years and in April 2025, the following clarifications were sought :

“Clarification- Reference your registration application. On examination of application, it is observed that (i) Yearwise details activity report not uploaded. Therefore, requested to upload Yearwise activity report of last three clearly reflecting aim and objective (as per uploaded audit report for which expdr. incurred). (ii) It has been reported that association has received donation as FC of Rs. 9 Lakh from Jitendranath V (Trustee) who is a US national and holds OCI Card no. A2372470 and it is found that association has received FC without valid permission of Govt. of India. Therefore, requested to provide details of FC received in which bank acc