In the history of justice, the use of technology has always been a helpful aid. But what happens when the country's tribunals themselves fall victim to Artificial Intelligence (AI) hallucination? The Supreme Court has delivered a historic judgment that serves as a massive wake-up call against the blind and indiscriminate use of AI in the legal world.
The Honorable Supreme Court, in the case of Pooja Ramesh Singh vs. Jammu and Kashmir Bank Limited (Civil Appeal No. 11950 of 2025), completely set aside the judgments of the NCLT (National Company Law Tribunal) and the NCLAT. The reason is bound to shock you—the NCLT, in its judgment, relied on court cases and paragraphs that do not even exist in the real world! They were entirely fabricated and fake (hallucinated) by AI.
๐ The Shocking Backstory
Loan Default and Guarantee: 'Essel Infraprojects Limited' (EIL) had given a corporate guarantee for credit facilities availed from Jammu and Kashmir Bank. When the original borrower failed to maintain repayment schedules, the bank filed an application under Section 7 of the Insolvency and Bankruptcy Code (IBC) in NCLT Mumbai to initiate insolvency proceedings.
NCLT's Decision: The NCLT accepted the application. However, to justify its ruling, the tribunal relied on 6 past judicial precedents, out of which several citations and excerpted paragraphs were completely fake.
Appeal and Disclosure: When the matter reached the Supreme Court, Senior Advocate Madhavi Divan drew the court's attention to the fact that the legal precedents cited in the NCLT judgment were completely non-existent and likely AI-generated.
๐ The "Fake Precedents" Exposed
The independent investigation undertaken by the Supreme Court revealed a startling reality:
| Alleged Case Name | Tribunal's Entry | Reality |
| State Bank of India v. M/s Shree Ram Urban Infrastructure Ltd. | Wrong Citation | The actual case title belonged to a different matter and the quoted paragraph was missing. |
| Everest Kento Cylinders Ltd. v. Union of India | Correct Citation, Fake Content | The case exists in law reports, but the excerpted paragraph is entirely fabricated. |
| ICICI Bank Ltd. v. Urban Infrastructure Real Estate Ltd. | Completely Fake | This citation is entirely non-existent in the books of law. |
| V.S. Dempo & Co. Ltd. v. Reliance Communications Ltd. | Completely Fake | This case was a complete imaginary creation of AI. |
⚖️ Supreme Court's Scathing Observation: "Like Releasing Toxic Gas"
The bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe took a strict stance on this negligence. The Court observed:
"For us, i.e., for those in the province of adjudication and determination of disputes, this by-product of AI, i.e., the production of fake, non-existent, and hallucinated material and its utilisation as precedents in law, is like the release of methyl isocyanate (the toxic gas from the Bhopal gas tragedy) in the province of law and justice: invisible, insidious, and catastrophic by the time anyone notices. It not only contaminates but takes away the very lifeblood of judicial determination."
๐ซ Key Directives: The Zero-Tolerance Policy
Zero Tolerance: Presenting AI-generated, unverified judgments in court constitutes grave misconduct on the part of advocates. Similarly, relying on such material is a serious lapse by judges. Any decision tainted by such fake material is deemed "no decision in the eyes of law."
Directives to the Bar Council of India (BCI): The Supreme Court has directed the BCI to form a dedicated committee to deliberate on this issue, formulate guiding principles to prevent such occurrences, and prescribe strict disciplinary actions for violations.
Human in the Loop: The apex court clarified that it is not against the adoption of technology, but human control and intellect must remain supreme at every stage of adjudication. The fundamental capacity to think and discern cannot be delegated to machines.
๐ Global Alarm Bells Ringing
The Supreme Court highlighted that this is a global challenge, referencing a UK case involving the prominent law firm Pinsent Masons LLP. In that instance, a junior associate accepted a completely fabricated statutory quote generated by AI software and submitted it to the High Court, leading to public admonishment and an internal referral to the regulators.
๐ฎ What Happens Next?
Quashing the flawed orders of the NCLT and NCLAT, the Supreme Court has restored the Section 7 IBC application to its original status. The NCLT has been directed to hear the matter afresh in accordance with the law and dispose of it expeditiously, preferably within two weeks, while maintaining the status quo in the interim.
Conclusion:
This judgment serves as a vital lesson for all lawyers, judges, and legal researchers across the nation. AI can be an exceptional tool to assist us, but it can never substitute human conscience, experience, and rigorous hard work. Saadhana (disciplined practice) and the continuous pursuit of truth remain the true foundations of justice.
Will robots handle our thinking and reasoning now?
The Supreme Court has observed that "if thinking is delegated and it forms a habit, it will have serious consequences for the core of human existence... we lose the capability to discriminate between what is right and what is wrong." Do you also feel that the increasing use of AI is weakening the human mind and critical reasoning? Share your thoughts in the comments below!
