Mar 11, 2020, 2:55 PM IST
In the wake of the YES Bank crisis, Axis Trustee Service Limited (ATSL) has approached the Bombay High Court challenging the Reserve Bank of India’s (RBI) proposed reconstruction scheme.
As part of the scheme, the RBI had proposed a move to write down YES Bank’s Additional Tier 1 bonds (AT-1 Bonds) that were outstanding as on March 5. ATSL, a debenture trustee of YES Bank, has claimed that the RBI ought not to be taken without giving it an opportunity to be heard.
The RBI had called for objections to the proposing restructuring plan to be submitted by March 9. Although ATSL submitted its objections and suggestions, it is apprehended that the scheme may be notified without hearing them out.
The matter was mentioned before the Division Bench of Justices KK Tated and SarangKotwal on Monday. The Bench had directed the petitioners to send the Union of India as well the RBI a notice that the petition had been filed. It also directed that the matter be heard on Wednesday, March 11.
The notice sent on behalf of ATSL states,
“In view of the fact that the matter is sub-judice, you are requested not to precipitate any action to the prejudice of the AT-1 Bond Holders.”
The petition filed by ATSL says that since 51% of the equity capital, which includes 8% of promoters is not being disturbed, the tier 1 bonds ought not to be written off at this stage.
The prayer sought by the Trustees is that it be allowed to make a “separate, purposeful and comprehensive representation” in writing setting forth all its reservations objections and suggestions to the draft scheme, and also an opportunity to be heard on the representation. As an interim relief, the Trustees want the scheme to not be implemented without such hearing.
ATSL was represented by Senior Advocate JanakDwarkadas, who was briefed by ManilalKher Ambalal & Co.