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SC Sets Aside NCLT Orders Relying On Fake AI Citations
In a landmark ruling that signals a strict shift in the judiciary’s approach to technology, the has set aside judgments from the (NCLT) and the (NCLAT). The apex court found that both tribunals had anchored their decisions on non-existent, "hallucinated" generated by Artificial Intelligence.
The bench, comprising Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe, declared a policy of "zero-tolerance" for the use of unverified AI-generated material in legal proceedings, emphasizing that such reliance compromises the core of .
The Backdrop: A Fabricated Foundation The dispute originated from an insolvency application filed by Jammu and Kashmir Bank Ltd. against Essel Infraprojects Ltd. (EIL) under . While the NCLT and NCLAT upheld the initiation of the resolution process, the appellant—a suspended director of EIL—challenged the decision, pointing out that the tribunals’ reasoning was propped up by six judicial citations that were entirely non-existent or contained fictional paragraphs attributed to real judgments.
The Supreme Court confirmed that these authorities were
, stating:
"The judicial process and the judgment under challenge are tainted by the usage of materials which are said to be
, but in reality, they are unreal, fake, and do not exist at all."
Zero Tolerance for 'Methyl Isocyanate' in Law The Court did not mince words in categorizing the scale of this error. It likened the use of such material to the mass-casualty toxic gas release in Bhopal:
"The production of fake, non-existent, and hallucinated material and its utilisation as
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."
By failing to verify the authenticity of the
cited, the tribunals inadvertently poisoned the stream of justice, rendering their subsequent orders unsustainable. The Court clarified that any decision built on an "iota" of such material is
"no decision in the eyes of the law."
A Call for Human Stewardship While acknowledging the efficiency benefits of AI—citing the recent authorization of an AI-driven law firm, , by the UK’s —the Court warned against the dangers of automation in legal reasoning.
"The story of AI... is not just an aid to assist us in our work, but is an alternative to our own thinking, reasoning and even decision making,"
the bench observed. The Court stressed the need for "absolute and total control" by human actors at every stage of
to prevent the erosion of the judicial "Saadhana"—a deliberate, disciplined mental practice essential for distinguishing between
(righteousness) and
.
Moving Forward: Accountability at the Bar Acknowledging that condemnation alone is insufficient, the Court has directed the to constitute an expert committee to formulate clear guidelines for legal practitioners. These rules are expected to provide a framework for the responsible use of technology and specify disciplinary consequences for advocates who submit fake .
Key Observations
*
On the sanctity of decisions:
"A 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
."
*
On
:
"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
in support of the determination."
*
On the role of humans:
"The control lies in being two steps ahead of its application and in making deliberate choices about when and where to apply."
Impact of the Ruling The Section 7 application against EIL has been restored to its original number at the NCLT, with instructions to proceed to a fresh determination within two weeks, strictly uninfluenced by the previous hallucinated citations. This judgment establishes a clear precedent for the future: while technology is welcome in the courtroom, it must remain a subordinate tool. The integrity of the law requires the discerning hand of human experience, which cannot be delegated to an algorithm.
