Supreme Court Quashes Verdict Based on AI-Generated Precedents

New Delhi: The Supreme Court on Thursday set aside a National Company Law Tribunal (NCLT) order after finding that it relied on “non-existent, fake, and hallucinated” judgments generated by artificial intelligence, and directed courts to adopt a zero-tolerance approach towards such material.

A bench of Justices P.S. Narasimha and Alok Aradhe annulled the NCLT ruling in an insolvency case involving Essel Infraprojects Ltd, holding that reliance on fabricated precedents vitiates the judicial process.

The bench said, “The production of fake, non-existent, and hallucinated material and its utilisation as precedents in law, is like the release of methyl Isocyanate 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.”

Stressing accountability, the court said, “It is necessary for Courts to adopt a zero-tolerance mode for producing, citing or using AI-generated precedents without verification. It is misconduct on the part of an advocate to cite such judgments without verification.”

The court held that even judicial reliance on such material amounts to a “serious lapse” and said, “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.”

It added that any decision influenced by such material must be set aside, stating, “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.”

The bench clarified that its ruling does not restrict the legitimate use of artificial intelligence but cautions against presenting fabricated content as legal precedent.

Calling for regulatory action, the court directed the Bar Council of India to constitute a committee to examine the issue and frame guidelines. It said the body should prescribe norms and disciplinary measures to prevent submission of such material in courts.

The case arose from an appeal challenging an NCLT Mumbai order admitting an insolvency plea in a dispute involving Pooja Ramesh Singh, Jammu and Kashmir Bank Ltd and Essel Infraprojects Ltd. The apex court found that several precedents cited in the tribunal’s order did not exist and included fabricated case references.

The court observed that the source of such errors does not diminish their impact on the rule of law and underlined the need for maintaining integrity in judicial decision-making.