The Supreme Court AI-generated fake precedents ruling marks a significant development in judicial accountability and the use of artificial intelligence in legal proceedings. The Supreme Court has held that citing AI-generated fake or hallucinated judicial precedents without verification amounts to professional misconduct by advocates. It also held that judges and adjudicating authorities commit a serious lapse if they rely on such material. The Court ruled that decisions founded on fabricated precedents are void and cannot be regarded as decisions “in the eyes of the law.”
A Bench comprising Justice PS Narasimha and Justice Alok Aradhe delivered the judgment. The Bench set aside orders passed by the National Company Law Tribunal (NCLT), Mumbai, and the National Company Law Appellate Tribunal (NCLAT). It found that both tribunals had relied on non-existent judicial authorities generated through AI hallucinations.
Zero-Tolerance Approach for Bar and Bench
The Bench stressed the need to protect the integrity of judicial decision-making. It said courts must adopt a “zero-tolerance” approach towards producing, citing, or relying on AI-generated precedents that have not been independently verified.
The Court observed:
“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.”
The Bench further stated:
“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.”
The Court also clarified:
“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.”
Bar Council Asked to Frame Guidelines
The Court directed the Bar Council to treat the issue with utmost seriousness. It asked the Council to frame guiding principles to prevent the citation of fabricated AI-generated authorities. It also directed the Council to prescribe disciplinary consequences for violations.
Court Questions Appellate Tribunal’s Scrutiny
The Bench questioned how the appellate tribunal failed to detect the fabricated citations. It noted that the non-existent judgments escaped scrutiny even at the appellate stage.
The Court observed:
“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 Bench added that a decision based on fabricated or hallucinated material amounts to a “subversion of the rule of law.” It held that such a decision is “no decision at all.”
Background of the Insolvency Dispute
The dispute arose from insolvency proceedings initiated by Jammu and Kashmir Bank Ltd. under Section 7 of the Insolvency and Bankruptcy Code against Essel Infraprojects Ltd. The company had executed a corporate guarantee for credit facilities extended to Pan India Utilities Distribution Company Ltd.
On August 28, 2024, the NCLT, Mumbai, admitted the insolvency application after recording a default of ₹87.43 crore. The NCLAT affirmed the admission order on September 11, 2025.
Challenge Before the Supreme Court
Appearing for Pooja Ramesh Singh, the suspended director of the corporate debtor, Senior Advocate Madhavi Divan argued that the tribunals had relied on six judicial decisions. According to her, those decisions either did not exist or did not support the legal propositions attributed to them.
The impugned orders referred to the following purported precedents:
- 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 filed before the Supreme Court stated that these authorities could not be traced in any recognised legal database. It confirmed that the cited authorities were fabricated or AI-generated hallucinated citations.
Respondent’s Affidavit and Final Ruling
Counsel for Respondent No. 1 filed an affidavit stating that these judgments had not been cited at the Bar. The affidavit stated that the NCLT had relied on them on its own.
Accepting this submission, the Supreme Court held that judicial orders based on non-existent precedents cannot stand in law. The Supreme Court AI-generated fake precedents ruling therefore set aside the orders passed by both the NCLT and the NCLAT.
