MUMBAI: The Supreme Court on Friday extended a stay on an order by the Bombay high court quashing the write-off of additional Tier-1 (AT1) bonds issued by Yes Bank. The apex court also issued notices to Axis Trustee Services on appeals filed by the Reserve Bank of India (RBI) and other bondholders.
AT1 bonds are high-yield securities that typically have loss-absorbing features, meaning they can be written off if a lender’s capital falls below a crucial level, which was invoked in Yes Bank’s case. A bench headed by Chief Justice DY Chandrachud took note of the submissions of Solicitor General Tushar Mehta, appearing for RBI, and senior advocate Kapil Sibal, representing Yes Bank, and extended the stay on the high court order.
The State Bank of India, along with ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank and Housing Development Finance Corp had stepped in to rescue the lender as a part of the restructuring exercise. The high court, while quashing the decision of the Yes Bank Administrator, had however said its decision will be in abeyance so the central bank and Yes Bank may appeal against it in the apex court.
“Issue notice. The stay granted (by the Bombay HC on its decision) will continue,” said the bench, which also comprised justices P S Narasimha and J B Pardiwala. The bench asked the parties to file a list of dates and a common compilation of records and case laws for expeditious disposal of the matter and listed it for a hearing on March 20. The high court had on January 20 quashed the decision of the Yes Bank on March 14, 2020, to write off the bonds noting the Administrator did not have the authority to take such a decision.
