The FCRA: Financial Regulation Must Not Become Identity Regulation 

Adv. Helen Tresa 

“Ekam sat viprā bahudhā vadanti.” Truth is one; the wise call it by many names” (Rigveda 1.164.46). 

India’s oldest scripture saw no threat in many paths to one truth. A recent judgment of the Madras High Court, deciding a question about a form, has put that idea to the test. 

Kanzeon Public Charitable Trust was founded in 2021 by Rev. Fr. Ama Samy SJ, a Jesuit priest known for teaching Zen meditation. It runs a meditation centre at Perumalmalai, near Kodaikanal, and is registered as a charity under Sections 12AB and 80G of the Income Tax Act, 1961 (para 2). On 18 June 2025, it applied for registration under the Foreign Contribution (Regulation) Act, 2010 (FCRA), describing itself as non-religious. On 19 November 2025, the Ministry of Home Affairs refused, holding that Zen is a variant of Mahayana Buddhism and that the trust was therefore religious. 

The trust appealed. It argued that Zen meditation belongs to India’s own Dhyana tradition and is not religious (para 4). The government replied that the refusal was well reasoned and that its policy is to check foreign funds that may be used for conversion (para 5). On 6 October 2026, the Madurai Bench of the Madras High Court (CMA(MD) No. 1057 of 2026) dismissed the appeal. Zen, it held, is a school of Buddhism; the trust had wrongly described itself, and the refusal was “eminently sustainable” (paras 7 and 15). 

On that narrow question of disclosure, the result may well be defensible. The FCRA is a regulatory law that allows the State to scrutinize foreign money. It does not allow the State to treat religious identity as evidence of wrongdoing. The difficulty lies in the reasoning the court used along the way: about Christianity, about the Abrahamic faiths, about a cross in a meditation hall and about the faith of the founder. Those observations were unnecessary and could shift the FCRA inquiry from what an institution does to who it is. 

The constitutional setting 

The Preamble secures to every citizen “liberty of thought, expression, belief, faith and worship”, “equality of status and of opportunity” and a fraternity “assuring the dignity of the individual”. The word “secular” was inserted by the Forty-second Amendment in 1976, but the commitment it expresses was present from the beginning. In S.R. Bommai v. Union of India, (1994) 3 SCC 1, a nine-judge bench of the Supreme Court held secularism to be part of the basic structure of the Constitution. 

Indian secularism does not require the removal of religion from public life. It requires principled neutrality among faiths. The State may regulate the secular activities of religious institutions and enforce financial, labour, land and criminal law against them. What it cannot do is prefer one faith, disadvantage another or treat religious affiliation as a presumption of institutional wrongdoing. That principle applies with particular force to the FCRA. The authority may examine compliance, reject misleading applications and investigate credible allegations of diversion or prohibited conduct. Its conclusions, however, must rest on the statute and the record, not on assumptions drawn from the religious background of an organization’s founder. 

Disclosure must be honest 

The duty of disclosure is not controversial. Rule 9 of the Foreign Contribution (Regulation) Rules, 2011 requires an applicant to state, in Form FC-3A, whether it is religious, cultural, economic, educational or social (para 7). A trust that claims to carry on educational or cultural work must disclose whether its programme also involves worship, ritual, doctrinal instruction or initiation. 

Being religious, however, does not disqualify an applicant. The court itself acknowledged that “an organization having a definite religious program is entitled to apply for a certificate of registration” and observed that the appellant “need not have been so coy” (para 8). The legal question is therefore whether the organization has disclosed its programme candidly and satisfied the statutory conditions. 

The correct approach is factual and functional. Does the institution conduct prayer, worship or ritual? Does it require religious adherence or seek to initiate participants into a faith? Does it undertake education, health care, social welfare, meditation or cultural work? Does the record disclose any prohibited activity? These questions can be answered from the trust deed, the application, public materials, programme content, accounts and credible evidence. They cannot be answered from the faith of the founder. 

A priest is not a presumption 

The bench’s doubt did not originate in any activity of the trust. It arose when the government’s counsel pointed out that “the author of the trust and the moving spirit behind the appellant organization is an ordained Christian priest”. The judgment then observed that “Christianity is a messianic religion” whose “theological and religious mission is to bring everyone within the fold of Jesus Christ”, recalled the saying that “a leopard will not change its spots” and stated that “unlike Hinduism, which is inclusive, the Abrahamic religions are inherently exclusive” (para 6). 

India’s own tradition speaks differently. At the Parliament of the World’s Religions in Chicago in 1893, Swami Vivekananda said: 

“We believe not only in universal toleration, but we accept all religions as true.” 

A tradition that is inclusive has room for a priest who teaches Zen. 

A founder’s religious vocation may be relevant background. It cannot substitute for proof of an institution’s character. A priest may run a school; a Hindu monk may establish a hospital; a Muslim charitable society may provide flood relief; a Buddhist teacher may conduct a meditation programme. In each case the institution must be assessed by its declared objects, actual activities, public representations and conduct. A Christian priest does not carry a legal presumption that every institution associated with him is missionary, any more than a Hindu religious teacher creates a presumption that every institution he founds is devotional. 

Nor was any comparative assessment of religions argued by the parties, proved by evidence or necessary to the decision. Christianity in India encompasses contemplative orders, schools, hospitals and social-service organizations with widely differing practices. The universal claims of a creed are not evidence of conversion by its adherents. In law, the test must be conduct, not theology. 

The picture that cuts both ways 

Having formed what it called a “nagging doubt”, the bench visited the appellant’s website and reproduced a motif “prominently installed in the meditation centre”: a statue of the Buddha with a cross above it (para 6). 

The Rigveda verse with which this article began offers another way of seeing the same image. 

A photograph cannot convey its meaning on its own. The image may indicate a religious programme. It may equally reflect an interfaith contemplative space or a meditation centre shaped by its founder’s own spiritual journey. The bench recorded the argument that “native and local motifs are appropriated by the messianic religions so that the ground is prepared for eventual take over”, but added that “it is not within our province to engage in such debates” (para 7). It also stated that “it is not for us to doubt” whether the trust’s claim to follow Zen was genuine (para 7). An image that allows for opposing interpretations cannot, on its own, establish either interpretation. A cross above a Buddha does not prove worship, conversion, or misdescription; those conclusions require evidence of actual programmes and practices. 

The use of the image also raises a procedural question. The rejection order did not include the photograph, and the judgment does not state that the trust was asked to explain it. The objection is not that the court looked at the trust’s own website, but that it drew an adverse inference without asking the trust to explain. In Arsha Vidya Parampara Trust v. Union of India, W.P.(MD) No. 29610 of 2025, decided on 19 December 2025 (reported as 2025 SCC OnLine Mad 13781), the same High Court faulted the FCRA authority because “the petitioner was never put on notice” of a ground used against it (para 8). The Division Bench in Kanzeon expressly approved that decision (para 12). If notice is required before the executive relies on adverse material, fairness equally requires that a court should not rest a decisive inference on material that the party had no opportunity to answer. 

Judged but never heard 

The respondent’s case was that the trust is “engaged in religious programs” (para 4). The court accepted it: “Though the applicant is engaged in religious programs, they wrongly projected themselves as non-religious” (para 13). Yet the judgment does not identify a single such programme. It refers to no worship service, ritual, prayer meeting or preaching. The government’s counsel made a general submission about the policy of checking foreign funds that may be used for conversion (para 5), but alleged no conversion by the trust, and the bench clarified that “we do not accuse the appellant of having any such agenda” (para 10). The finding rests, in substance, on the classification of Zen as a school of Buddhism, the founder’s priesthood and the photograph. 

In Arsha Vidya, the authority had concluded that the trust “appears to be religious”. The court held that such a conclusion “cannot be a tentative one” and that the authority “had not met the standard set out in the provision” (para 13). A finding of religious programmes that specifies none is open to the same objection. 

Whose knowledge is “Indian knowledge”? 

The judgment draws a distinction between religious organizations and cultural or educational ones. It holds that an organization engaged in the systematic teaching of “Vedanta, the Bhagavad Gita, the Upanishads, Yoga and allied Indian Knowledge Systems” is not a religious institution, and that “Indian Knowledge Systems would fall under the category of education or culture” (para 9). In its summary, it adds that “persons and organizations engaged in upholding the civilisational heritage of India have to be classified as educational or cultural” (para 14). In Arsha Vidya, the same court had held that “Bhagavad Gita is not a religious book. It is rather a moral science” (para 14), and that a trust recognized as charitable by the Income Tax Department “cannot cease to be one under FCRA regime” (para 16). This creates an inconsistency in the court’s findings: Zen meditation is treated as religious, while the study of Hindu scriptures and practices such as Yoga is treated as cultural or educational. 

There is no objection to recognizing that these traditions contain philosophy, ethics and literature. The difficulty arises when that interpretive generosity is applied unevenly. The Kodaikanal trust was likewise registered under Sections 12AB and 80G of the Income Tax Act (para 2). It too argued that Zen practices “belong to the Dhyana tradition of this nation” (para 4), and the word “Zen” does derive from the Sanskrit dhyana. The bench’s answer was: “Zen philosophy is of Chinese origin. Organizations like the appellant trust cannot therefore claim any right to be registered under FCRA” (para 10). The FCRA contains no provision that makes the geographical route of a philosophy relevant to registration. 

Buddhist meditation can be taught as contemplation, psychology or ethics. Christian texts can be taught as literature or moral thought; Islamic scholarship through philosophy and history; Sikh and Jain teachings through their ethics of service and non-violence. Equally, an institution of any faith becomes religious where, in the court’s own words, its programmes “pertain to worship and rituals” (para 14). That is a sound test, provided it is applied to everyone. If the teaching of one tradition is treated as educational by default, while another is presumed religious because of its lineage, the classification rests on civilisational preference rather than actual content and risks violating Article 14. 

Words that outlive the case 

A court deciding whether a Zen trust disclosed its programme accurately does not need to decide whether Christianity is “messianic” or the Abrahamic faiths “inherently exclusive” (para 6). Still less does it need to observe that “radical Christian Institutions are notorious for indulging in such activities” (para 10). These are not neutral legal propositions. They concern the character of religious communities, and they are capable of being detached from the facts and used elsewhere to justify suspicion. That is already happening: within days of the judgment, its remarks were circulating on social media as proof that Christian institutions hide conversion behind schools and meditation halls. 

In State of Uttar Pradesh v. Mohammad Naim, AIR 1964 SC 703 (para 10), the Supreme Court identified three considerations relevant to disparaging judicial remarks: whether the person or body concerned is before the court and able to explain or defend itself; whether there is evidence on record to justify the remarks; and whether the remarks are necessary for the decision of the case. No Christian institution was before the court. No evidence of conversion was on record. And the observation had no bearing on whether Zen is a religion. 

It should be acknowledged that the bench did not single out one community for the conversion bar. It held that “a fundamentalist Hindu Organization engaged in Ghar Wapsi cannot be registered under FCRA”, and described India as “not a melting pot but a salad bowl” (para 10). That principle of neutrality is correct. But neutrality must be visible in a judgment’s reasoning, tone and evidentiary standards, not only in a sentence. Christians constitute about 2.3 per cent of India’s population (Census 2011), and for a small minority the neutrality of the courts carries particular weight. Judicial language influences future FCRA decisions, renewal applications and public attitudes. The more general the observation, the greater the need for evidence and necessity. 

Scholarship persuades; it does not legislate 

In summing up, the bench directs that “the decision of the authority will not be judged on a high threshold but in the light of the parameters mentioned in para 11” (para 14). Paragraph 11 reproduces a passage from an article by Prof. (Dr.) P. Ishwara Bhat titled “Balancing transnational charity with democratic order, security, social harmony and accountability: a critical appraisal of the Foreign Contribution (Regulation) Act, 2010”. The judgment does not give the article’s publication details. It appeared in the Journal of Indian Law and Society (JILS), published by NUJS, Vol. 4, Monsoon Issue (2013). 

Courts are entitled to draw on academic writing, and Indian courts frequently do. But such writing persuades; it does not bind. The passage in paragraph 11 describes, in general terms, the dangers against which the FCRA is directed: threats to democratic values, “indoctrination”, obstruction of developmental work, foreign funding of public figures, terrorism and communal disharmony. It was not framed as a set of criteria for administrative decision-making. Concepts such as “indoctrination” and “social harmony” are elastic, and their elevation into a decisional standard, coupled with a direction that decisions will not be judged on a high threshold, leaves considerable room for subjective refusals. Social harmony is, admittedly, a consideration under Section 12(4)(f)(vi) of the FCRA; the concern is that a general passage about indoctrination is being used as a test for refusal. The same passage, notably, observes that after the Cold War “the fear of indoctrination remains, as a paper tiger” (para 11). 

Regulation, not presumption 

The Supreme Court held in Noel Harper v. Union of India, (2023) 3 SCC 544, that there is no vested right, much less an absolute right, to receive foreign contribution; the High Court relied on that decision (para 10). The bench was right to reject any suggestion that foreign contribution can be claimed as an unrestricted entitlement. 

The absence of a right to registration does not, however, imply the absence of a right to fair treatment. The bench holds that “considerable leeway and unfettered discretion should be given to the authority” (para 12). In S.G. Jaisinghani v. Union of India, AIR 1967 SC 1427 (para 14), the Supreme Court described the absence of arbitrary power as “the first essential of the rule of law upon which our whole constitutional system is based”. Discretion under the FCRA is broad, but it must rest on relevant material, be supported by reasons and be applied consistently between similarly situated applicants. The bench itself preserves review where “the discretion is perversely exercised or the relevant materials are not taken into account or there is non-application of mind” (para 12), which suggests that the discretion it contemplates is not, in truth, unfettered. 

Of greater significance is the statutory text. Section 12(4) of the FCRA sets out the matters the Central Government must consider before granting registration. In relation to conversion, Section 12(4)(a)(ii) refers to an applicant that has been prosecuted or convicted for indulging in activities aimed at conversion, through inducement or force, from one religious faith to another. The provision refers to specified conduct and incorporates procedural safeguards. The bench’s concluding direction, that “organizations engaged in converting people of one religious faith to another shall be denied FCRA registration” (para 14), omits both the requirement of inducement or force and the requirement of prosecution or conviction. The Act’s wider grounds, such as harm to communal harmony under Section 12(4)(f), require evidence about the particular applicant; they do not create a blanket bar on conversion. A court may interpret the grounds Parliament has enacted; it cannot enlarge them. 

The State is entitled to act against unlawful conversion by any organization, whether Hindu, Christian, Muslim, Buddhist or otherwise. It is not entitled to presume unlawful conversion from religious identity, clerical status or institutional symbols. 

Is every cross now a question mark? 

The judgment leaves a question of wider consequence. If the reasoning of the judgment is followed, what is the position of the many Christian-managed schools, colleges, hospitals and welfare societies that hold FCRA registration? Many display a cross or maintain a chapel; many were founded by priests or religious congregations. Those facts reflect institutional history. They do not, by themselves, establish a religious programme, misrepresentation or conversion. 

Read strictly, a description of the Abrahamic faiths as “inherently exclusive” (para 6), combined with the weight given to the founder’s priesthood, would expose purely educational, medical or welfare institutions managed by Christians or Muslims to heightened scrutiny on the basis of the presumed influence of their founders’ private faith. That would be difficult to reconcile with the Constitution. Article 14 guarantees equality before the law to every person, natural or juristic. Article 25 protects freedom of conscience, which a priest exercises in practising and teaching Zen. Article 30 guarantees minorities the right to establish and administer educational institutions of their choice, a guarantee that would be weakened if religious symbols on a campus were treated as grounds for suspicion. 

In fairness to the bench, its holding does not go so far. It rests on the nature of Zen, not on the presence of symbols or clergy, and nothing in the FCRA converts a symbol into a programme. But judgments are read for their reasoning as well as their holdings, and an authority considering a renewal application may take its cue from the manner in which the court approached the founder’s faith and the photograph. That risk deserves to be addressed before it is reflected in administrative practice. 

A better path 

The rejection could have been sustained on a confined and principled basis: if the trust inaccurately described the nature of its programme, that was sufficient. The court need not have reached broader conclusions about Christianity, religious exclusivity or symbols. 

The appropriate rule for every FCRA applicant is straightforward. The authority must consider the organization’s declared objects, the actual content of its programmes, the role of worship or ritual, the expectations placed on participants, its financial record and any reliable evidence of statutory disqualification. It must disclose adverse material, allow a fair response and record reasons specific to the organization. That approach protects the State’s legitimate interest in regulating foreign contribution while preserving equal treatment. 

The issue is not whether religious institutions should receive special treatment. They should not. The issue is whether they will be judged by the same legal standards as every other institution. They must be. 

The final word 

The judgment contains one sound principle: an applicant for foreign contribution must be candid about its nature. That principle deserves to be upheld. Candour, however, is owed in both directions, and applicants are equally entitled to a neutral assessment of what they actually do. 

India’s secularism has always embraced the presence of faith in public life. It requires that the State not rank faiths, presume wrongdoing from affiliation or allow administrative decisions to turn on religious identity. 

The FCRA may regulate money, transparency and compliance, and may act against fraud, coercion and diversion. It must not turn a cross, a priest, a Buddha statue or a meditation centre into a presumption of suspicion. 

The FCRA may regulate money. It must not regulate identity. 

Paragraph references in this article are to the judgment in Kanzeon Public Charitable Trust v. Union of India, CMA(MD) No. 1057 of 2026, Madras High Court (Madurai Bench), decided on 6 October 2026, unless otherwise stated. References to Arsha Vidya are to W.P.(MD) No. 29610 of 2025, decided on 19 December 2025. Views are personal. 

Cases cited 

• Kanzeon Public Charitable Trust v. Union of India, CMA(MD) No. 1057 of 2026, Madras High Court (Madurai Bench), decided on 6 October 2026. 

• Arsha Vidya Parampara Trust v. Union of India, W.P.(MD) No. 29610 of 2025, Madras High Court, decided on 19 December 2025; 2025 SCC OnLine Mad 13781. 

• S.R. Bommai v. Union of India, (1994) 3 SCC 1. 

• State of Uttar Pradesh v. Mohammad Naim, AIR 1964 SC 703. 

• S.G. Jaisinghani v. Union of India, AIR 1967 SC 1427. 

• Noel Harper v. Union of India, (2023) 3 SCC 544.