Supreme Court pulls up Finance Ministry over Yes Bank AT-1 bond write-off

The Supreme Court on Wednesday pulled up the Finance Ministry over the 2023 write-off of Yes Bank’s Rs 8,415 crore AT-1 bonds and asked Solicitor General Tushar Mehta to produce Cabinet meeting records, quorum details and related documents by 3 PM.

Coming down heavily on the Finance Ministry, the Supreme Court on Wednesday asked Solicitor General Tushar Mehta to produce the Cabinet resolution, minutes of the meeting and related documents on the basis of which the decision to write off additional tier-1 (AT-1) bonds worth Rs 8,415 crore was taken in 2023.

Mehta has to produce the minutes of the Cabinet decision by 3 PM today.

A bench led by Justice Dipankar Datta asked Mehta, appearing for the Finance Ministry, to also submit “full disclosure of rules of the Cabinet meeting”, details of the quorum and the names of members present at the meeting that took the decision.

“Satisfy our conscience. Tell us if there was a proper Cabinet meeting. If not, then you will invite an order from us. We are keeping it open… you are the second senior-most law officer of the court, you will advise your client properly whether you would like an order from the court or would like to withdraw your appeal,” Justice Datta told Mehta.

The solicitor general suggested that he first produce the documents and then let the court take a view.

“Is there any immunity that the court cannot see the file?” the judge asked the solicitor general, who argued that the Department of Financial Services under the Finance Ministry had written to the RBI about the Cabinet decision.

Yes Bank, RBI and the Finance Ministry had moved the Supreme Court in 2023 against the Bombay High Court’s January 2023 order quashing the Reserve Bank of India’s (RBI) and Yes Bank’s decision to write off additional tier-1 (AT-1) bonds worth Rs 8,415 crore.

Institutional investors such as mutual funds, including Reliance Nippon, and bondholders, including financial institutions and retail investors, had invested as much as Rs 8,415 crore in Yes Bank’s AT-1 bonds. Subsequently, the bank’s retail AT-1 bondholders moved the high court challenging the decision and seeking to reclaim their money. The high court ruled in their favour.