Citing AI-Generated Fake Precedents Is Advocate Misconduct; Judgments Based On Them Are Void : Supreme Court

The Supreme Court on Thursday (July 2) called for a "zero-tolerance" approach towards AI-generated fake or hallucinated judicial precedents, holding that it is professional misconduct for advocates to cite such judgments without verification and a serious lapse on the part of judges to rely on such non-existent precedents while deciding cases.

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."

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 and Justice Alok Aradhe 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.

“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. 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.”

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.

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.

“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 Court observed, stressing that “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 rule of law.”

Background

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 ₹87.43 crore. The NCLAT subsequently affirmed the admission order on September 11, 2025.

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.

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.

 The counsel appearing for the respondent no.1 filed an affidavit stating that these judgments were not cited at the bar and were relied upon by the NCLT on its own.

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.

Also From judgment: Supreme Court Sets Aside NCLT Judgment For Using AI-Hallucinated Citations, Asks BCI To Examine Issue

Headnote

Information Technology and Adjudication – Use of Artificial Intelligence (AI) – Verification of Precedents – Zero-Tolerance Policy - Zero-tolerance for AI-generated fake precedents - The Supreme Court declared a strict zero-tolerance mode for the Bar as well as the Bench regarding producing, citing, or using AI-generated precedents without thorough verification - Citing such fake or hallucinated judgments without verification amounts to professional misconduct on the part of an advocate - it is a serious lapse if a judge relies on such fabricated material as precedents to support a judicial determination. [Paras 10-12]

Validity of decisions based on hallucinated material - Any decision passed by a Court or an adjudicating authority that is based on fake, non-existent, or hallucinated AI material is considered "no decision in the eyes of the law." - This holds true irrespective of whether the hallucinated material had a direct or indirect bearing on the final decision-making - Such decisions fundamentally violate the sanctity of adjudication, subvert the rule of law, and are liable to be set aside entirely even if only an iota of fake material enters the decision-making process. [Paras 7 - 17]

Human-in-the-loop and regulatory imperative - While acknowledging the transformative capabilities of AI technology in easing workloads and aiding efficiency, the Supreme Court asserted the necessity of maintaining absolute human control over adjudication with a human in the loop at every stage - Legal professionals and adjudicating bodies must remain cautious against delegating core thinking processes to AI, as it can insidiously compromise judicial reasoning – The Supreme Court emphasized that managing AI hallucinations requires systemic implementation through Public Policy and enforceable Rules and Regulations, coupled with conscious Bar-Bench coordination. [Paras 5-10]

Directions to the Bar Council of India - To ensure accountability, the Supreme Court directed the Bar Council of India (BCI) to constitute a dedicated committee to deliberate on the issue of advocate members submitting fake and hallucinated AI generated material as law precedents - The BCI is mandated to prescribe guiding principles to prevent such occurrences and outline corresponding disciplinary actions for violations. [Paras 9-13]

Insolvency and Bankruptcy Code, 2016 – Section 7 – Reliance on Non-Existent Precedents by NCLT & NCLAT – Order Set Aside - Adjudication tainted by fake citations - Where the National Company Law Tribunal (NCLT) admitted a Section 7 application based on its own research containing fake and non-existent AI generated citations, and the National Company Law Appellate Tribunal (NCLAT) subsequently failed to scrutinize and detect the errors, the entire judicial process stood tainted - the Supreme Court set aside the orders of both the NCLT and NCLAT, restoring the Section 7 application to its original number for a fresh disposal on merits within a stipulated timeline, ordering the parties to maintain a status quo in the interim. [Relied on M. Subramaniam v. S. Janaki, (2020) 16 SCC 728; 2020 SCC OnLine SC 341; V.S. Dempo & Co. Ltd. v. Reliance Communications Ltd., (2021) 10 SCC 176; Sarbjit Singh v. Union Bank of India, (2022) 7 SCC 464; Paras 13-20]

Cause Title: POOJA RAMESH SINGH VERSUS JAMMU AND KASHMIR BANK LTD & ANR.

Citation : 2026 LiveLaw (SC) 653

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