Supreme Court: Zero Tolerance for AI-Generated Fake Judgments, Orders Based on Hallucinated Precedents Set Aside

June 2, 2026 : The Supreme Court has delivered a significant ruling aimed at safeguarding the integrity of the judicial system, holding that courts must adopt a strict “zero-tolerance” policy against the use, citation, or reliance on AI-generated judicial precedents unless their authenticity has been independently verified.

A Bench comprising Justice P. S. Narasimha and Justice Alok Aradhe made the observation while setting aside orders passed by the National Company Law Tribunal and the National Company Law Appellate Tribunal in the insolvency proceedings involving Essel Infraprojects.

The Court found that the NCLT had relied on fabricated, non-existent, and AI-generated “hallucinated” judicial precedents that were presented as genuine legal authorities. The Bench held that permitting courts to rely on unverified AI-generated case law would undermine the credibility of the justice delivery system and compromise the rule of law.

Emphasizing the professional responsibility of advocates, the Supreme Court observed that every judicial precedent cited before a court must be carefully verified for authenticity. It warned that lawyers who rely upon or present fabricated AI-generated judgments without proper verification may be guilty of professional misconduct.

The Bench further ruled that any judicial order influenced, even marginally, by fabricated or hallucinated legal material cannot be treated as a valid decision in law. Such orders, the Court said, are liable to be set aside once it is established that false judicial authorities formed part of the adjudicatory process.

Recognizing the growing challenges posed by artificial intelligence in legal practice, the Court directed the Bar Council of India to constitute a committee to examine the issue. The committee has been asked to frame guidelines governing the use of AI-generated legal material and recommend appropriate disciplinary measures against advocates who submit fabricated or hallucinated precedents before courts.

Highlighting the gravity of the issue, the Bench observed that the circulation of fictitious AI-generated judicial precedents poses a serious threat to the administration of justice. The Court compared the potential consequences of such fabricated legal authorities to the catastrophic impact of the release of methyl isocyanate, underscoring the need for immediate safeguards.

In the present case, the Supreme Court found that the NCLT had relied on several judgments that did not exist, while some genuine Supreme Court decisions had been cited with fabricated passages falsely inserted into them. After independently verifying the citations, the Bench concluded that some authorities were entirely fictitious and others had been manipulated through fabricated extracts.

The Court also considered an affidavit filed by Jammu and Kashmir Bank, which clarified that its counsel had never cited the disputed authorities. According to the bank, the precedents relied upon by the NCLT appeared to have been located through the tribunal’s own research. The Supreme Court further noted that these fabricated authorities also went unnoticed during appellate proceedings before the NCLAT.

Holding that reliance on false and non-existent judicial precedents had fundamentally vitiated the adjudicatory process, the Supreme Court set aside the orders of both the NCLT and the NCLAT. The Court restored the Section 7 insolvency application to the NCLT for fresh adjudication and requested the tribunal to decide the matter preferably within two weeks.

Pending fresh consideration, the Supreme Court directed all parties to maintain status quo.