The Court declared that a decision based on such fake precedents are void as they cannot be treated as a “decision in the eyes of the law.”<\/p>\n
Setting aside the judgments of the NCLAT and the NCLT after finding that they had relied on AI-generated fake citations, a Bench of Justice PS Narasimha <\/b>and Justice Alok Aradhe<\/b> held that any decision tainted by fabricated or hallucinated precedents is “no decision in the eyes of law” and must be set aside to preserve the integrity of the judicial process.<\/p>\n
\u201cIt 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.<\/u> 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.\u201d<\/i><\/p>\n The Court directed the Bar Council to take up this issue with utmost seriousness, and prescribe a guiding principle to prevent such occurrences, along with the disciplinary action that will follow a violation of the norms.<\/p>\n The bench questioned the judicial propriety of the NCLAT, noting that despite being an Appellate Tribunal, how could it escape the scrutiny of the non-existent judgment cited by the tribunal. <\/p>\n \u201cWhat 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.\u201d<\/i>, the Court observed, stressing that \u201ca decision of a Court or an adjudicating authority based on material which is fake and hallucinated is no decision at all, and it amounts to subversion of the rule of law.\u201d <\/i><\/p>\n Background <\/b><\/p>\n The bench heard an appeal arising from a insolvency proceedings initiated by Jammu and Kashmir Bank Ltd. under Section 7 of the Insolvency and Bankruptcy Code against Essel Infraprojects Ltd. (EIL), which had executed a corporate guarantee in respect of credit facilities extended to Pan India Utilities Distribution Company Ltd. The NCLT, Mumbai, admitted the insolvency application on August 28, 2024, recording a default of \u20b987.43 crore. The NCLAT subsequently affirmed the admission order on September 11, 2025. <\/p>\n Before the Supreme Court, Senior Advocate Madhavi Divan, appearing for the suspended director of the corporate debtor, Pooja Ramesh Singh, contended that the tribunals had relied upon six judicial decisions that either did not exist or failed to support the legal propositions attributed to them. <\/p>\n The impugned orders referred to purported precedents including 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 and ICICI Bank v. Urban Infrastructure Real Estate, (2019) 16 SCC 528. An affidavit placed before the Court confirmed that these authorities could not be traced in any recognised legal database, exposing them as fabricated or “hallucinated” AI-generated citations. <\/p>\n Accepting the submission, the Supreme Court held that judicial decisions founded upon non-existent precedents cannot be sustained and accordingly set aside the orders of both the NCLT and the NCLAT. <\/p>\n![\"\"](\"https:\/\/www.livelaw.in\/h-upload\/2026\/07\/02\/683702-llbbanner-01jpg.webp\")
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