AFAIK, the Wikimedia Chapter (Wikimedia India) *is* registered as a charitable society under the Karnataka Societies Registration Act. Therefore, it *is* a fiduciary organization acting in public interest. I would like to hear a clarification on your claims above.
Further, my understanding is that the Chapter has been unable to renew/secure its permissions under the Foreign Contribution (Regulation) Act, which prevents it from receiving funds from foreign sources, including the Foundation. This is not a situation unique to Wikimedia India, as more than 20,000 NGOs nationally faced cancellations of their licenses last year due to reasons that have largely to do with politics rather than compliance related issues.
If the inability of Wikimedia india to secure these permissions is one of the primary reasons for de-recognition, as a founding member of Wikimedia India and as someone who is largely an external observer, it appears to me that the Foundation is choosing to punish the chapter for not having the political clout to retain its license. For most of its existence, the Wikimedia Chapter has been a volunteer-run body with limited expertise in public policy. Can you please clarify whether the Foundation has extended support to the Chapter in form of, for example, contracting a government relations specialists to help renew/secure their FCRA license?
Looking forward to hearing from you.