Judgment Intelligence
Petition DismissedYes Bank Limited & Anr. v. Axis Trustee Services Limited & Ors. (with connected appeals by Yes Bank, the RBI and the Union of India)
2026 INSC 1132
Civil Appeal No. 3182 of 2025 with Civil Appeal Nos. 3193-3202, 3183-3192 and 3203-3212 of 2025
- Court
- Supreme Court of India
- Date of Decision
- 15 October 2026
- Bench
- Justices Dipankar Datta and Augustine George Masih
- Relevant Acts & Sections
- Banking Regulation Act, 1949 — Sections 36ACA, 45; Yes Bank Limited Reconstruction Scheme, 2020 — Clause 6; RBI Master Circular — Basel III Capital Regulations (2015) — Annex 16, Clause 2.15
Final Outcome
Appeals dismissed; the Bombay High Court's judgment setting aside the write-down stands and interim orders are vacated. Annual coupons are to be paid as per the Information Memoranda; parties bear their own costs, and the observations are confined to these appeals (paras 80-83).
Key holdings
- The validity of an administrative action is tested on the facts and law as they stood on the date it was taken (para 15).
- A general savings clause in a reconstruction scheme cannot confer a specific power to write down AT-1 bonds that the scheme deliberately dropped (paras 40-41).
- Under clause 2.15 of Annex 16, AT-1 bonds must be written down before the reconstruction takes effect, not while it is being implemented (para 63).
- At the point of non-viability the write-down is for the RBI; an administrator under Section 36ACA acts within the board's powers and cannot exercise it (paras 69-73).
- Annual coupons on the bonds remain payable in terms of the Information Memoranda (para 81).
Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.
Brief Facts
Yes Bank issued Basel III Additional Tier 1 bonds of Rs. 3,000 crore in 2016 and Rs. 5,415 crore in 2017, with Axis Trustee as trustee (para 5). After the Central Government imposed a moratorium on 05.03.2020, the RBI appointed an Administrator, and a draft reconstruction scheme proposed writing the bonds down in full (paras 6, 20). After bondholder objections and a writ petition, the scheme notified on 13.03.2020 omitted that clause (paras 22, 26-28, 33). The next day the Administrator wrote the bonds down, citing clause 2.15 of Annex 16 of the RBI's Master Circular (paras 8, 56). The Bombay High Court set the write-down aside (para 9).
Court's Findings
The write-down was tested as on 14.03.2020; Yes Bank's later recovery and SBI's stake sale were irrelevant (paras 14-15). The RBI's note showed the Central Government consciously dropped the write-down after objections and a conversion proposal; the Administrator's act undid that deliberative process, and a general savings clause cannot confer a power not specifically given (paras 35-41). Under clause 2.15 of Annex 16 the bonds had to be written down before the reconstruction took effect, not at any time while it ran; in the Lakshmi Vilas Bank amalgamation, bonds were written down a day before the scheme came into force (paras 63-64). At the pre-specified trigger the bank had an option it never exercised; at the point of non-viability only the RBI could write the bonds down, and an Administrator under Section 36ACA, standing in for the board, could not assume that regulatory power (paras 52-54, 69-73). The Court called the RBI a mere bystander while the CET1 ratio fell to 0.6%, and noted that high-risk AT-1 bonds were sold to individual investors in violation of the Master Circular (paras 53, 78-79).
Legal Principle
A write-down of AT-1 bonds must follow the RBI's Master Circular and the bond terms. At the point of non-viability only the RBI can write the bonds down, and on a reconstruction under Section 45 of the Banking Regulation Act they must be written down before the scheme takes effect, not afterwards by an administrator (paras 63, 69-73).
Precedents Relied Upon
- Nawabkhan Abbaskhan v. State of Gujarat (1974) 2 SCC 121
Relied on for testing the validity of an administrative action as it stood on the date it was taken, in view of the law as it then stood.
- Yash Deep Trexim Private Limited v. Namokar Vinimay Pvt. Ltd. (2014) 1 SCC 545
Left open whether the Sick Industrial Companies (Special Provisions) Act applies to foreign companies registered in India; noted as a question left for an appropriate case that may never arise again.
