Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 15 October 2026

Case Overview

  • Parties: Appellants – Yes Bank Limited (with other parties) and the Reserve Bank of India; Respondents – Axis Trustee Services Limited (and others), Indiabulls Housing Finance Ltd, Union of India.
  • Nature of proceedings: Civil appeals (Nos. 3182, 3183‑3192, 3193‑3202, 3203‑3212 of 2025) challenging a High Court judgment that had set aside the Administrator’s order to write down Yes Bank’s Additional Tier‑1 (AT‑1) bonds.
  • Background: Yes Bank issued Basel‑III compliant AT‑1 non‑convertible debentures – Rs 3,000 cr on 23 Dec 2016 and Rs 5,415 cr on 18 Oct 2017 – with Axis Trustee Services Ltd appointed as trustee. The bank’s financial position deteriorated, leading to a moratorium on 5 Mar 2020 under Section 45 of the Banking Regulation Act and the RBI appointing an Administrator under Section 36ACA.
  • Draft and Reconstruction Schemes: A draft reconstruction scheme was released on 6 Mar 2020; the final Yes Bank Reconstruction Scheme, 2020 was notified on 13 Mar 2020 in the Official Gazette. The draft scheme contained Clause 6 sub‑clause (4) mandating permanent write‑down of AT‑1 bonds; this clause was omitted in the final scheme.
  • Administrator’s action: On 14 Mar 2020, the Administrator wrote down the AT‑1 bonds (Rs 3,000 cr and Rs 5,415 cr) and communicated the action to BSE and NSE. This action was challenged in multiple writ petitions before the Bombay High Court, which set aside the write‑down.
  • Contentions: Appellants argued the write‑down was necessary to avoid a financial avalanche and that the High Court erred. Respondents contended the Reconstruction Scheme excluded any provision for bond write‑down, making the Administrator’s action ultra vires.
  • Key legal issues: (A) Whether the Administrator could write down the bonds absent a specific provision in the Reconstruction Scheme; (B) Whether the Master Circular and the Information Memoranda conferred authority on the Administrator; (C) Interpretation of the “before reconstitution” language in Annex 16, Clause 2.15 of the RBI’s Basel III Master Circular.

Final Outcome

  • The Supreme Court affirmed that the Reconstruction Scheme deliberately omitted the clause allowing a write‑down of AT‑1 bonds; consequently, the Administrator lacked statutory authority to do so.
  • The Court held that the Administrator could not act as a substitute for the RBI and that the power to write down AT‑1 instruments resides only with the RBI under the Master Circular, not with an appointed Administrator.
  • All appeals filed by Yes Bank, the RBI and other parties were dismissed. The High Court’s decision striking down the Administrator’s order stands.
  • The interim order (if any) is vacated. The annual coupon payments on the AT‑1 bonds remain payable as per the Information Memoranda. Each party bears its own costs.

Topics: Banking Regulation, Bond Write‑Down, Reconstruction Scheme