Yes Bank seeks transfer of all cases against AT-1 bond write-off to Bombay HC

Yes Bank on Wednesday moved the Supreme Court seeking transfer of the petitions pending before various high courts and consumer forum to the Bombay High Court. Various investors have challenged the Bank’s March decision to write off two tranches of additional tier-1 bonds issued by it in 2016 and 2017.

AT-1 bonds worth Rs 8,415 crore were completely written off after a scheme of reconstruction for the bank was approved by the government and the RBI.

To avoid “multiplicity of the proceedings,” Yes Bank is seeking transfer of cases from the HCs of Madras and Delhi and one from District Consumer Disputes Redressal Commission, Faridabad, to the Bombay High Court on the ground that all the writ petitions/ consumer complaint involve same or substantially same questions of law emanating from its March 14 decision. The Bombay HC is already hearing two petitions filed by Indiabulls Housing Finance and Axis Trustee Services.

The matter will next come up for hearing on September 23.

According to the 2016 Information Memorandum and 2017 Information Memorandum, the exclusive jurisdiction to decide any issue arising of the second tranche AT1 bonds and third tranche AT1 bonds vests with the Bombay HC, the Bank stated in its transfer petition.

Due to serious deterioration in the financial position of the bank, the central government in consultation with RBI had on March 5 decided to supersede the board of Yes Bank and put it under moratorium for one month, and imposed a withdrawal cap of Rs 50,000 a month for all depositors.

Yes Bank in its appeal stated that its “write-down decision is a purely commercial decision which was required to be taken, given the exigencies of the situation and was well within the contours of the 2016 Information Memorandum and 2017 Information Memorandum”.

Additional Tier I bonds, issued by banks and companies bearing a fixed rate of interest payable at regular periods, are not risk-free and the banks also have the ability to permanently write down such bonds with no obligation to repay the principal amount, it added.