Bonds worth Rs 8,415 crore were reduced to zero by the administrator a day after Yes Bank was reconstituted, and the Supreme Court has now declined to revive the Yes Bank AT1 Bond Write-Off, leaving the Bombay High Court’s 2023 verdict in place.
New Delhi: Dismissing the appeals filed by Yes Bank, the Reserve Bank of India and the Union of India, the Supreme Court on Thursday upheld the Bombay High Court judgment that set aside the March 2020 write-off of Yes Bank’s Additional Tier-1 (AT1) bonds worth Rs 8,415 crore [Yes Bank Limited and Others v. Axis Trustee Services Limited and Others].
The Bench of Justice Dipankar Datta and Justice Augustine George Masih held that the administrator appointed to run the bank had no authority to write off the bonds unless the reconstruction scheme specifically permitted it.
Rescue on March 5, write-down on March 14
Yes Bank was close to collapse on March 5, 2020, when the Centre placed it under a moratorium and the RBI superseded its board and appointed an administrator. The Centre then notified the Yes Bank Limited Reconstruction Scheme, 2020, and the bank was reconstituted on March 13, 2020.
The next day, March 14, the administrator wrote down the entire value of two AT1 bond tranches, about Rs 8,415 crore, to zero. Mutual funds, financial institutions and retail investors lost their full investment, while equity shareholders were not written down.
ALSO READ: Supreme Court Transfers RBI’s Yes Bank AT-1 Bond Case to Different Bench
The High Court’s ruling
Acting for the bondholders, Axis Trustee Services Limited challenged the decision in Writ Petition No. 850 of 2020. On January 20, 2023, a Division Bench of then Chief Justice S.V. Gangapurwala and Justice S.M. Modak quashed the write-off.
The High Court noted that the draft reconstruction scheme had provided for writing off the AT1 bonds, but that clause was dropped from the final scheme. It held that the administrator, whose tenure had been extended for seven days after reconstitution only to hand over charge to the new board, could not take such a policy decision in that window and had exceeded his powers.
Before the Supreme Court
Yes Bank, the RBI and the Union of India moved the Supreme Court. On March 3, 2023, the top court stayed the High Court judgment. The special leave petitions were admitted on February 19, 2025, and final arguments concluded on February 26, 2026, when judgment was reserved.
In May 2026, the Bench led by Justice Dipankar Datta asked the Centre to produce the Cabinet resolution, minutes, quorum details and the names of members present at the meeting that cleared the reconstruction scheme, before receiving written submissions later that month.
The bank, the RBI and the Centre defended the write-down as part of the rescue of a failing bank. The bondholders argued that the write-off was taken after the bank had been reconstituted, without any authority in the final scheme, and that it reversed the usual order of loss absorption by leaving equity untouched while wiping out the bonds.
Where the bondholders stand now
The core finding is that the power to write down AT1 bonds had to flow from the reconstruction scheme itself. Since the final scheme carried no such provision, the administrator’s decision to reduce the bonds to zero could not be sustained.
With the appeals dismissed, the High Court’s January 2023 ruling in favour of the bondholders’ trustee, Axis Trustee Services Limited, now stands. The Supreme Court had stayed that judgment in March 2023 while it examined the appeals, so the bondholders had so far received no relief despite winning before the High Court. With the stay gone, the write-off stands quashed and the AT1 bondholders’ claims revive.
Yes Bank had earlier said that any liability arising from the final verdict would be recognised in the relevant reporting period. The detailed judgment, setting out the Court’s full reasoning, is awaited.
Case Title: Yes Bank Limited and Others v. Axis Trustee Services Limited and Others [SLP(C) No. 3713 of 2023 and connected matters]
Bench: Justice Dipankar Datta and Justice Augustine George Masih, Supreme Court of India
Date of Judgment: October 15, 2026
Impugned Judgment: Bombay High Court, Writ Petition No. 850 of 2020, dated January 20, 2023