Supreme Court Sets Aside Tribunal Order Over AI-Hallucinated Judgments, Warns Against ‘Invisible Threat’ to Justice
Apex Court quashes NCLT and NCLAT rulings after discovering reliance on non-existent AI-generated case citations; directs Bar Council of India to examine safeguards
In a landmark ruling on the responsible use of artificial intelligence in the legal system, the Supreme Court has set aside orders passed by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) after finding that both decisions relied on fictitious judicial precedents believed to have been generated through AI. The Court held that judicial decisions cannot rest on non-existent authorities and warned that unchecked AI use poses a serious threat to the rule of law.
The case arose from insolvency proceedings involving Essel Infraprojects. During the hearing, the Supreme Court discovered that several judgments cited in the tribunal orders could not be traced in any official legal database. The Bench concluded that these were “hallucinated” citations—false legal authorities that appeared authentic but had no existence in law.
A Bench of Justice P.S. Narasimha and Justice Alok Aradhe observed that while artificial intelligence can assist legal research, it cannot replace independent judicial reasoning or professional verification. The Court stressed that every citation relied upon in judicial proceedings must be carefully verified by judges and lawyers before being incorporated into orders or pleadings.
Using unusually strong language, the Supreme Court compared the dangers of unregulated AI in adjudication to the release of methyl isocyanate gas, describing AI-generated fake precedents as an “invisible, insidious and catastrophic” threat to the administration of justice. The Court warned that fabricated legal authorities contaminate judicial reasoning and undermine public confidence in the legal system.
The Bench emphasized that the integrity of judicial decisions depends upon authentic legal authorities rather than persuasive-looking but fabricated AI outputs. It observed that a judgment founded on imaginary precedents cannot be sustained, regardless of whether the error resulted from technological misuse or inadequate human oversight.
Consequently, the Supreme Court quashed both the NCLT and NCLAT orders and directed that the matter be reconsidered in accordance with law, without relying on unverifiable authorities. The Court clarified that its intervention was necessary to preserve the credibility of judicial decision-making and ensure that adjudication remains rooted in genuine legal principles.
Recognising the wider implications of artificial intelligence in legal practice, the Supreme Court also directed the Bar Council of India to examine the issue and consider framing appropriate safeguards governing the use of AI by advocates and legal professionals. The Court indicated that clear professional standards are essential as AI tools become increasingly common in legal research and drafting.
The judgment does not prohibit the use of AI in courts or legal practice. Instead, it draws a clear distinction between AI as an assistive technology and AI as a substitute for legal analysis. The Court reaffirmed that the ultimate responsibility for the accuracy of legal submissions and judicial orders rests with human professionals, who remain accountable for every authority cited before a court.
Legal experts believe the decision will become a defining precedent for the use of artificial intelligence in India’s justice system. Beyond the immediate insolvency dispute, the ruling is expected to influence judicial administration, legal education, and professional ethics by reinforcing that technological innovation must operate within the constitutional framework of accuracy, accountability, and the rule of law.
