As the legality is quite subjective, but yes it mainly depends on a bunch of software uses, distribution and modification laws. It has added few extra useful features which are not available in original application of WhatsApp, on the same hand it is some what a controversial app which my violate some legal rules. For potential users of the application, it is essential to understand these issues.
Understanding Modified Apps
Since FM WhatsApp is a modded app, as known that the modifications are not from the original developer but third parties and this is why they have added extra & modified features to the original WhatsApp inc app which is built using reverse engineering. This practice also raises serious legal and policy questions (pdf), especially surrounding copyright and terms of service.
Issues of Copyright & Intellectual Property
Copyright laws are the most significant legal aspect of using Modded apps such as FM WhatsApp. Generally it is illegal to modify code of an app where the rights are held by others without their permission. In addition, making a modded version of an app available to the public may violate the copyright of the right holder and open a variety of other legal consequences for the developers of this mode.
Violation of Terms of Service
Also using FM WhatsApp, You can also violate WhatsApp's Terms of Service which prohibit users from using the service in a manner that "translate, reverse-engineer, decompile, disassemble, modify or create derivative works based on the Services." Whatsapp services will issue users using these terms of permanent ban.
Possible Legal and Security Pitfall
Now, it is not illegal as such to download and use fm whatsapp since it users original code, but yes, there is a big difference between safe or legal & disclosure of copyright information. Moreover, they are plagued with security risks since the modded apps do not go through the same rigorous security testing as an official app. Without this oversight, there may be potential risks which allow the user to suffer data loss issues along with being mercilessly attacked by malware.
User Responsibility
The user himself is responsible for remembering these risks and should use FM WhatsApp or not to. While these bells and whistles are a nice added touch, they introduce their own legal and security vulnerabilities that may just negate the advantages they bring.
As a result, it cannot be said the usage of FM app is illegal but there are some practices that directly hit upon copyright laws and terms of use policies which makes it risky to use them. Much like any endeavor, users will need to weigh these considerations against the features being provided and make an educated decision about whether or not it is worth the possible added risks of compliance and security.