The Judgments It Relied On Do Not Exist

What happened

The National Company Law Tribunal decided a matter and, in support of its judgment, relied on what read as settled precedent. The National Company Law Appellate Tribunal heard the appeal and did not disturb it.

The precedents did not exist. They were fake, hallucinated material generated through artificial intelligence, cited as though they were law.

How the Court established this matters. Respondent No. 1 filed an affidavit stating that the judgments the NCLT relied on had not been cited by its counsel at the bar. The affidavit went further: the so-called precedents had been obtained through the adjudicating authority’s own research.

The fake, non-existent judgments escaped scrutiny by the first statutory appellate tribunal.

What the Court held

The Bench did not treat this as an error of reasoning to be corrected on the merits. It treated it as a defect going to the root of the decision itself.

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.

That formulation is the holding worth citing. Not that the decision was wrong, or unreasoned, or perverse — that it was no decision at all. The judgment and orders of the NCLT dated 28 August 2024 and the NCLAT dated 11 September 2025 were set aside.

The direction to the Bar Council

The Court did not stop at the parties before it. It recorded that members of the bar submitting fake and hallucinated material as though it were precedent is a problem requiring an institutional answer, and directed the Bar Council of India, as the apex statutory body, to constitute a committee and deliberate on it.

The direction has three parts. The Bar Council must take the issue up with utmost seriousness. It must deliberate earnestly. And it must prescribe a guiding principle to prevent such occurrences, together with the disciplinary action that will follow a violation of the norms.

That last element is the one to watch. A guiding principle without a stated consequence changes little; the Court has asked for both.

What the Court said about AI in adjudication

The judgment is not hostile to the technology. It discusses the adoption of AI in aid of adjudication and control over its application and usage, and it surveys developments abroad — the Solicitors Regulation Authority authorising an AI-driven law firm, reporting on an AI-based firm winning in court, and a British firm’s botched AI use raising dependency concerns.

What it insists on is the safeguard. The requirement the Court states is a human loop at every stage, and a zero-tolerance approach to producing, citing or using AI-generated precedents without verification.

The distinction being drawn is between AI as a research aid whose output is checked, and AI as a source of authority whose output is not. The first is a tool. The second is what happened here.

Why this reaches further than insolvency

Nothing in the holding is confined to the Insolvency and Bankruptcy Code or to tribunals. The proposition is about any court or adjudicating authority and any decision resting on material that is not real.

It also cuts both ways procedurally. If a decision founded on fake precedent is void rather than merely erroneous, that is a ground of challenge available to whoever is aggrieved — but it equally exposes any party whose own filings contain unverified citations.

The practical exposure is not theoretical. Here the fake citations survived a tribunal and an appellate tribunal before anyone checked.

Who argued it

Frequently asked

What did the Supreme Court hold about AI-generated fake precedents?

It held that a decision of a court or adjudicating authority based on material which is fake and hallucinated is no decision at all, and that it amounts to subversion of the rule of law. Such a decision is unsustainable, and the orders of the NCLT and NCLAT were set aside on that basis.

Who had cited the fake judgments?

Nobody. Respondent No. 1 filed an affidavit stating that the judgments relied on by the NCLT had not been cited by its counsel at the bar, and that the so-called precedents had been obtained through the adjudicating authority's own research. They then escaped scrutiny at the first statutory appellate tribunal.

Can a judgment be set aside because the precedent it relies on does not exist?

On this judgment, yes, and on a stronger footing than ordinary error. The Court did not treat it as a mistake to be corrected on the merits but held there was no decision at all, because the material underpinning it was unreal.

What has the Bar Council of India been directed to do?

To constitute a committee and deliberate on members of the bar submitting fake and hallucinated material as if it were precedent, to take the issue up with utmost seriousness, and to prescribe a guiding principle to prevent such occurrences together with the disciplinary action that will follow a violation.

Does this judgment prohibit using AI in legal work?

No. It discusses the adoption of AI in aid of adjudication and refers to developments abroad. What it requires is a human loop at every stage and a zero-tolerance approach to producing, citing or using AI-generated precedents without verification.

What to do about this in practice

1. Verify every citation in anything you file, against the reported text and not against a summary. A citation that cannot be opened is a citation that does not go in.
2. Check the authorities in orders passed against you, particularly ones neither side cited. This judgment exists because a respondent noticed precedents its own counsel had never mentioned.
3. If you use an AI tool for research, treat its output as a lead to be confirmed, never as a source. The Court's requirement is a human in the loop at every stage.
4. Put a verification step in your own filing process before a signature goes on a document, not after.
5. Watch for the Bar Council committee's guiding principle and the disciplinary consequences attached to it.

Authorities the Court relied on

• M. Subramaniam v. S. Janaki, (2020) 16 SCC 728 — referred to

Source. Supreme Court of India, 2026 INSC 668, [2026] 7 S.C.R. 571, Civil Appeal No. 11950 of 2025, decided 2 July 2026 by Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe. This explainer is written from the judgment text as reported.

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