The Supreme Court on Thursday ruled that courts must follow a strict “zero-tolerance” policy against the use, citation or reliance on AI-generated judicial precedents unless their authenticity has been thoroughly verified.
A Bench comprising Justice PS Narasimha and Justice Alok Aradhe made the observation while setting aside orders passed by the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) in the Essel Infraprojects insolvency case. The Court found that the NCLT had relied on fabricated, non-existent and AI-hallucinated case law presented as genuine judicial precedents.
Stressing the need to protect the integrity of the justice delivery system, the Bench held that courts cannot permit the introduction or reliance on unverified AI-generated legal authorities.
The Court further observed that advocates have a professional duty to verify every precedent they cite. It held that relying on or presenting fabricated AI-generated judgments without verification could amount to professional misconduct.
The Bench underscored that any judicial order influenced, even to the slightest extent, by fake or hallucinated legal material cannot be regarded as a valid decision in law. It said such orders are liable to be set aside once it is established that fabricated material formed part of the adjudicatory process.
To address the growing concern, the Supreme Court directed the Bar Council of India (BCI) to establish a committee to examine the issue. The committee has been tasked with formulating guidelines on the use of AI-generated legal material and recommending disciplinary measures against lawyers who submit fabricated or hallucinated precedents before courts.
Highlighting the seriousness of the issue, the Court remarked that the circulation of fictitious AI-generated precedents within the judicial system poses a grave threat to the administration of justice, comparing its impact to the devastating consequences of the release of methyl isocyanate on human life.
In the present matter, the Supreme Court found that the NCLT had relied on several judgments that did not exist, along with fabricated extracts falsely attributed to authentic Supreme Court decisions.
After independently verifying the citations, the Court concluded that while some authorities were entirely fictitious, others contained fabricated passages inserted into genuine judgments.
The Bench also considered an affidavit filed by Jammu and Kashmir Bank, which stated that its counsel had never cited the disputed judgments. According to the bank, the authorities relied upon by the NCLT had been located through the tribunal’s own research.
The Court further noted that these fabricated precedents had also escaped detection during appellate proceedings before the NCLAT.
Holding that reliance on false and non-existent judicial authorities had vitiated the adjudicatory process, the Supreme Court set aside the orders of the NCLT and NCLAT. It restored the Section 7 insolvency application to the NCLT for fresh adjudication and requested the tribunal to decide the matter, preferably within two weeks.
Until the matter is reconsidered, the Court directed all parties to maintain status quo.
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