NEW DELHI – The Supreme Court of India on Thursday, July 2, established a “zero-tolerance” mandate against the use of AI-generated fake or “hallucinated” judicial precedents, ruling that any judicial decision relying on such fabricated material is void and constitutes a subversion of the rule of law.
A Bench comprising Justice PS Narasimha and Justice Alok Aradhe held that the citation of non-existent judgments without verification is professional misconduct for advocates and a “serious lapse” for judges. The Court declared that decisions tainted by such hallucinations cannot be treated as legal decisions and must be set aside to preserve judicial integrity.
The ruling follows the discovery that both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) had relied on fabricated citations in a high-stakes insolvency matter. It also marks one of the clearest statements yet from India’s apex court, whose constitutional role includes safeguarding the integrity of adjudication under the Constitution of India, on how artificial intelligence may – and may not – be used inside courtrooms.
Voiding Decisions Based on AI Hallucinations
The Court clarified that the presence of even a small amount of fabricated material in the decision-making process necessitates the complete setting aside of the order, regardless of whether the fake precedent had a direct or indirect impact on the final outcome. By framing the defect as jurisdictional rather than technical, the Bench signalled that such contamination strikes at the core of judicial decision-making rather than being a curable irregularity.
“It is necessary for Courts to adopt a zero-tolerance mode for producing, citing or using AI-generated precedents without verification. It is a misconduct on the part of an advocate to cite such judgments without verification. Equally, it is a serious lapse if a judge relies on such a fake or hallucinated AI-generated material as precedents in support of the determination. We have no hesitation in declaring that such a decision is no decision in the eyes of the law, irrespective of whether such material had a direct or indirect bearing on the decision-making. Such decisions are to be set aside even if an iota of fake or hallucinated material enters the decision-making process, as it would violate the sanctity of adjudication. It is absolutely necessary to maintain integrity in decision making, and we reiterate and declare zero tolerance for the Bar as well as the Bench to cite, refer to, or rely on such material. It is also clarified that our judgment shall have no bearing on the rightful use of AI, but on the presentation or reliance on fake or hallucinated material as if it were a court precedent.”
At the same time, the Court drew a careful line between fabricated precedents and legitimate technology use, clarifying that research tools and AI-assisted drafting remain permissible so long as human actors independently verify any judgment or authority presented as law.
Case Origin: J&K Bank vs. Essel Infraprojects
The ruling emerged from an appeal involving insolvency proceedings initiated by Jammu and Kashmir Bank Ltd. against Essel Infraprojects Ltd. (EIL) under Section 7 of the Insolvency and Bankruptcy Code. The case centered on a corporate guarantee provided by EIL for credit facilities extended to Pan India Utilities Distribution Company Ltd., placing the decision at the intersection of financial-sector stability and creditor rights.
Key factual elements of the proceedings include:
- Default Amount: ₹87.43 crore.
- NCLT Mumbai Action: Admitted the insolvency application on August 28, 2024.
- NCLAT Action: Affirmed the admission order on September 11, 2025.
- Discovery: Senior Advocate Madhavi Divan, representing suspended director Pooja Ramesh Singh, identified six judicial decisions relied upon by the tribunals that either did not exist or were misrepresented.
The Court examined several purported precedents that were found to be untraceable in any recognized legal database, confirming they were AI-generated hallucinations:
- State Bank of India v. Shree Ram Urban Infrastructure, 2020 SCC OnLIne SC 341
- Everest Kento Cylinders v. Union of India, (2015) 2 SCC 1
- ICICI Bank v. Urban Infrastructure Real Estate, (2019) 16 SCC 528
An affidavit submitted by counsel for respondent no.1 stated that these judgments were not cited by the lawyers at the bar but were instead relied upon by the NCLT on its own initiative, raising concerns about internal research practices within tribunals that routinely handle large volumes of commercial disputes.
Judicial Propriety and the Rule of Law
The Bench expressed sharp concern over the failure of the NCLAT, a statutory appellate body, to detect the non-existent citations. The Court questioned how such fabricated material could escape the scrutiny of an appellate tribunal, noting that the current climate of implicit trust between the Bench and the Bar creates a vulnerability in the legal system.
“What about the Appellate Tribunal? The fake, non-existent judgments escaped scrutiny by the first statutory appellate tribunal. Today’s courts and tribunals implicitly trust lawyers when referring to precedents cited before them. Imagine the hardship of a situation in which the Court must verify the authenticity of each judgment cited by an advocate,” the Court observed.
The Bench further stressed that any decision based on hallucinated material “amounts to subversion of the rule of law.” By treating the use of non-existent authorities as an institutional failure rather than an isolated error, the ruling effectively places all judicial fora – from commercial tribunals to constitutional courts – on notice that digital research shortcuts cannot dilute the traditional duty to verify precedent.
Directives for the Bar Council and Institutional Response
To prevent future occurrences, the Supreme Court directed the Bar Council to treat the issue with “utmost seriousness.” The Council is required to:
- Prescribe guiding principles to prevent the citation of unverified AI-generated precedents, including clear due-diligence expectations for lawyers using AI-based research tools.
- Define specific disciplinary actions that will follow violations of these norms, aligning professional accountability with the Court’s zero-tolerance standard.
The judgment is expected to catalyse parallel reforms within court registries and tribunals, including tighter internal protocols on how draft orders are researched, checked and cleared before pronouncement, particularly in economically sensitive domains such as insolvency and banking.
The Supreme Court has officially set aside the orders of both the NCLT and the NCLAT in the matter of Pooja Ramesh Singh versus Jammu and Kashmir Bank Ltd & Anr, restoring the matter to a clean slate and underscoring that, in the era of AI-assisted lawyering, institutional trust must be anchored in verifiable law rather than machine-generated text.