SC AI-generated fake judgments: The Supreme Court has set aside NCLT and NCLAT orders after finding reliance on AI-generated fake case citations, directing zero tolerance for hallucinated judgments in judicial proceedings.
In a landmark judgment addressing the growing use of Artificial Intelligence in the legal system, the Supreme Court has declared zero tolerance for AI-generated fake or hallucinated judicial precedents. Holding that reliance on non-existent judgments strikes at the very foundation of justice, the Court set aside the decisions of both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), observing that any decision based on fabricated legal authorities cannot be sustained in law.
The judgment was delivered on 2 July 2026 by a Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe in Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Another (Civil Appeal No. 11950 of 2025).
Table of Contents
Table of Contents
Background of the Case
The appeal arose from insolvency proceedings initiated under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
Jammu and Kashmir Bank had filed an application before the NCLT against Essel Infraprojects Ltd., which had acted as a corporate guarantor for loans extended to another company. The NCLT admitted the insolvency application, appointed an Interim Resolution Professional, and declared a moratorium under Section 14 of the IBC.
The appellant challenged the admission order before the NCLAT, arguing that the liabilities had shifted due to a corporate demerger and amalgamation and that the corporate guarantee had ceased to exist after a renewed sanction letter. However, the NCLAT dismissed the appeal and affirmed the NCLT’s decision.
The matter eventually reached the Supreme Court after the appellant pointed out that several judicial precedents relied upon by the NCLT were either non-existent, incorrectly cited, or contained AI-generated passages that never formed part of the reported judgments.
Arguments Before the Supreme Court
Appellant’s Case
The appellant argued that the very foundation of the NCLT’s decision was legally flawed because it relied upon fake and hallucinated judicial precedents.
According to the appellant:
- some cited judgments did not exist at all;
- several citations referred to incorrect cases;
- paragraphs attributed to genuine Supreme Court decisions were entirely fabricated; and
- the reliance on such material rendered the adjudicatory process fundamentally defective.
Respondent’s Stand
Jammu and Kashmir Bank filed an affidavit stating that its counsel had never cited the fake judgments before the Tribunal.
The Bank clarified that the erroneous precedents were introduced through the Tribunal’s own legal research and not by any party appearing in the proceedings.
Supreme Court’s Findings
AI Can Assist Courts, But Cannot Replace Human Judgment
The Supreme Court acknowledged that Artificial Intelligence has become an increasingly useful tool for lawyers and judges. However, the Bench cautioned that AI should remain an aid to adjudication, not a substitute for judicial reasoning.
The Court observed that technology must always remain under human supervision and emphasized that every stage of adjudication must retain a “human in the loop.”
The Bench noted that while AI can improve efficiency, unchecked dependence on it could compromise independent legal reasoning and judicial decision-making.
Zero Tolerance for AI Hallucinations in Judicial Proceedings
The most significant aspect of the judgment is the Court’s firm stand against AI-generated fake legal authorities.
After independently examining the citations relied upon by the NCLT, the Supreme Court found that:
- some judgments cited by the Tribunal did not exist;
- several case citations were incorrect;
- genuine Supreme Court decisions were attributed with paragraphs that were never part of those judgments.
The Court described such AI-generated hallucinations as a serious threat to the justice delivery system.
Drawing a powerful analogy, the Bench observed that fabricated AI-generated precedents are like the release of a dangerous invisible gas into the legal system—remaining unnoticed until significant damage has already been done.
Accordingly, the Court declared that there will be zero tolerance for producing, citing or relying upon AI-generated fake precedents without proper verification.
Responsibility of Judges and Lawyers
The Court made it clear that the responsibility extends to both the Bar and the Bench.
According to the judgment:
- Advocates commit professional misconduct if they cite AI-generated fake judgments without verification.
- Judges and tribunals commit a serious judicial error if they rely upon fabricated precedents while deciding cases.
The Court categorically held that any decision based upon fake or hallucinated precedents is “no decision in the eyes of law.”
Even if such material influences the reasoning only marginally, the judgment becomes legally unsustainable because it compromises the integrity of judicial decision-making.
Directions to the Bar Council of India
Recognising the wider implications of AI in legal practice, the Supreme Court directed the Bar Council of India (BCI) to constitute an expert committee to examine the issue.
The Court asked the BCI to:
- frame guidelines governing the use of AI by advocates;
- prescribe standards for verification of AI-generated material; and
- recommend disciplinary measures against lawyers who submit fabricated AI-generated precedents before courts.
The Bench observed that effective regulation would require close cooperation between the Bar and the Bench to ensure that AI enhances, rather than undermines, the administration of justice.
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Court Did Not Examine the Merits of the Insolvency Dispute
Importantly, the Supreme Court clarified that it expressed no opinion on the merits of the insolvency dispute between the parties.
Instead, the Court confined itself to the procedural defect arising from the reliance on fabricated precedents.
The Section 7 insolvency application has been restored to the NCLT for fresh adjudication in accordance with law.
Final Decision
Allowing the appeal, the Supreme Court:
- set aside the judgments of both the NCLT and the NCLAT;
- restored the Section 7 insolvency proceedings to the NCLT;
- directed the Tribunal to decide the matter afresh, independently and in accordance with law;
- ordered that the matter be disposed of preferably within two weeks; and
- directed the parties to maintain status quo until the fresh decision is rendered.
Why This Judgment Matters
This judgment is likely to become one of India’s most significant judicial pronouncements on the responsible use of Artificial Intelligence in legal proceedings.
While the Supreme Court has endorsed the use of AI as a valuable technological aid, it has drawn a clear constitutional boundary: AI cannot replace human judicial reasoning, and fabricated AI-generated legal authorities have no place in the justice delivery system.
The ruling sends a strong message to courts, tribunals and legal professionals that every AI-generated legal reference must be independently verified before being relied upon. As AI tools become increasingly common in legal research and drafting, this judgment is expected to shape future judicial practices, professional ethics, and regulatory standards across India’s legal system.
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