The SupremeCourt on Friday extended astay on an order by the Bombay High Court quashing thewrite-off of additional Tier1 (AT1) bonds issued by YesBank.

The high court had set aside the 2020 decision of the Reserve Bank appointed administrator to write off the AT1 bonds worth Rs 8,400 crore to bail out fund-starvedYes Bank.

A bench headed by Chief Justice D.Y. Chandrachud, while extending the stay granted by the Bombay High Court in January 2023, agreed to examine the plea of the RBI and Yes Bank challenging the high court order.

The high court while setting aside the decision of the administrator to write off the loan had granted stay of its order which now stood extended by the apex court.

The bench also comprising Justice P.S. Narasimha and J.B. Pardiwala issued notices to Axis Trustee Services Ltd on the appeal filed by RBI, YesBank and certain other investors challenging the high court order to quash the decision of the administrator to write off AT1 bonds.

AT1 bonds are high-yield securities that typically have loss-absorbing features, meaning they can be written off if a lender’s capital falls below a crucial level, which was invoked in Yes Bank’s case.

The administrator had written down the loans as part of the restructuring packaged for Yes Bank.

At the hearing on Friday, the CJI said the court will protect the interest of the investors who are likely to be affected by the write-off.

But at the same time, the court will examine the validity of the plea raised by the RBI and Yes Bank.

Solicitor-General Tushar Mehta appearing for the RBIand senior advocate Kapil Sibal representing Yes Bank said the administrator had the statutory powers to write off the ATI loans.

Both the RBI and Yes Bank argued that in the absence of writing off the loans, other banks would not be infusing their funds into Yes Bank.

Mukul Rohatgi representing Axis Trustee said the administrator was not vested with authority to write down the bonds. The matter will be heard on March 28.