Arsha Vidya Parampara Trust Vs Union of India (Madras High Court)
Compounded FCRA Lapse Can’t Be Used to Deny Registration: Bhagavad Gita, Vedanta & Yoga Are Not “Religious” Activities
The Madurai Bench of the Madras High Court set aside the rejection of FCRA registration granted to Arsha Vidya Parampara Trust, holding that once an FCRA violation is compounded, it cannot be used as an adverse ground to deny registration, and further ruled that teaching Bhagavad Gita, Vedanta & Yoga does not make an institution a “religious organisation” under FCRA.
The Trust, established in 2017 and registered u/s 12A of the Income-tax Act, applied for FCRA registration. The Ministry of Home Affairs rejected the application on two grounds:
(i) receipt of foreign contribution without prior permission and alleged transfer of FC to another organisation, and
(ii) the Trust “appeared to be religious” in nature.
On the first ground, the Court noted that:
- The Trust admitted a technical violation of receiving foreign contribution from its own trustee (OCI holder),
- The authorities themselves offered compounding,
- The Trust paid ₹3,70,500, and the offence was formally compounded u/s 41 of FCRA, and
- After compounding, the violation stands wiped out, and cannot be resurrected to deny registration.
The Court held that relying on a compounded offence to reject registration would be disproportionate, arbitrary and contrary to the very scheme of Section 41, observing that “once an offence has been compounded, the slate is wiped clean”. Allegations of transfer of FC funds were also struck down as vague, unsupported by material, and violative of natural justice, since no prior notice was issued on that aspect.
On the second ground, the Court delivered a significant ruling holding that:
