NEW DELHI: The Supreme Court on Thursday quashed an order of the National Company Law Tribunal (NCLT), finding that it relied on “non-existent, fake, and hallucinated” AI-generated judgment precedents, and warned strictly that courts must adopt a zero-tolerance approach to such citations.
“The production of fake, non-existent, and hallucinated material and its use as precedent in law is like the release of methyl isocyanate in the province of law and justice: invisible, insidious, and catastrophic by the time anyone notices. It not only contaminates but drains the very lifeblood of judicial determination,” remarked a Bench of Justices PS Narasimha and Alok Aradhe.
The court made these observations after hearing an appeal in the Essel Infraprojects insolvency case. The Court noted that the NCLT had based its findings on several citations that were “fictitious” and appeared to have been generated by AI tools.
The Bench found that the tribunal had relied on fabricated judgment precedents. The Bench highlighted that judicial decisions must be anchored in authentic, verifiable law.
“AI may assist research, but it cannot substitute verification. Neither can a judge delegate reasoning to software, nor can counsel avoid accountability for filings,” the judgment of the apex court stated.
Allowing the appeal, the Court set aside the NCLT’s March 18, 2026, order and remanded the matter for a fresh hearing. It directed the tribunal to decide the dispute uninfluenced by the fake precedents and strictly in accordance with existing legal principles.
The Bench said, “A zero-tolerance policy is needed across courts and tribunals against reliance on non-existent case law. The harm to the rule of law is identical whether the lapse is human or machine-driven.”
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