The films in question are 'Broken' and 'The Story of One' (both directed by Kannan Arunasalam) and 'No Fire Zone' (directed by Callum Macrae).
"FSA protests this unwarranted intrusion into the cultural sphere, an action that goes against the freedom of expression and the right of documentary filmmakers to exhibit their work," stated Kanak Mani Dixit, chair of Film Southasia in a release.
'No Fire Zone' claims to be "the true story of war crimes committed at the end of the Sri Lankan civil war in 2009". It shows the Sri Lankan government's alleged role in the massacres towards end of the war.
"Once again the Sri Lankan government has shown its true colours," the film's director Macrae said in a statement while pledging to show the documentary around the world.
In protest against the Nepal government's directives to stop screening of the three documentaries the organisers stated that they would be shown outside the festival venue at a "private screening".
The documentaries will remain in contention for the festival awards.
A total of 35 documentaries from the region from eight countries including Myanmar are to be screened in the four day festival. There are 15 entries from India.
Film Southasia has been organizing documentary festivals since 1997. This is the ninth edition of the event.