New Delhi: The Supreme Court of India on Thursday issued a stern directive against the growing threat of artificial intelligence hallucinations in the legal system, setting aside a major insolvency verdict after discovering that the tribunal had relied on completely fabricated judicial precedents. A Bench comprising Justices PS Narasimha and Alok Aradhe declared a policy of zero tolerance for both the Bar and the Bench regarding the citation, reference, or reliance on unverified AI-generated legal material.
Delivering a scathing assessment of the risks posed by unchecked technology, the Bench compared the infiltration of fabricated legal text to an environmental disaster. The judges noted that the production of fake, non-existent, and hallucinated material used as precedents acts like the release of toxic gas into the province of law and justice, operating invisibly and insidiously until it causes catastrophic damage to the lifeblood of judicial determination. The apex court explicitly ruled that any judicial decision incorporating even an iota of fake or hallucinated material violates the core sanctity of adjudication and must be set aside immediately, regardless of whether the error had a direct or indirect bearing on the final outcome.
The landmark ruling came during an appeal filed by appellant Pooja Ramesh Singh against Jammu and Kashmir Bank Ltd and Essel Infraprojects Ltd, challenging a Section 7 corporate insolvency order passed by the National Company Law Tribunal (NCLT) Mumbai. Upon reviewing the tribunal’s order, the Supreme Court discovered that multiple key precedents cited by the NCLT to justify the insolvency admission were completely non-existent. The fabricated citations included fabricated case names and invented paragraphs falsely attributed to genuine legal volumes, specifically naming cases like ICICI Bank Ltd vs Urban Infrastructure Real Estate Ltd (2019) and Sarbjit Singh vs Union Bank of India (2022), neither of which exist in official law records.
During the proceedings, Jammu and Kashmir Bank filed an official affidavit clarifying that their legal counsel had never cited those fictitious cases, suggesting the NCLT panel had inadvertently generated the fake data through its own independent digital research. However, the Supreme Court held that the precise source of the error did not diminish the damage inflicted on the rule of law. The Bench termed it a serious misconduct for an advocate to cite unverified judgments and equally termed it a serious lapse for a judge to rely on such hallucinated material to support a verdict.
To enforce institutional accountability beyond a simple prohibitory declaration, the apex court directed the Bar Council of India (BCI) to immediately constitute a specialized committee to deliberate on the matter. The BCI has been tasked with prescribing clear guiding principles to prevent such occurrences and establishing strict disciplinary actions for lawyers who submit fabricated materials. Concluding the judgment, the Bench clarified that the ruling does not oppose the rightful, supportive use of AI technology in legal research, but firmly asserts that human oversight must remain strictly in the loop at every stage of the adjudication process to maintain the absolute integrity of the Indian judiciary.
