Calling for a "zero-tolerance" approach towards AI-generated, fake, or hallucinated judicial precedents, the Supreme Court held that it is professional misconduct for advocates to cite such judgments without verification, and that it is a serious lapse on the part of judges to rely on such non-existent precedents while deciding cases, Live Law reported.

The court declared that a decision based on such fake precedents is void as they cannot be treated as a "decision in the eyes of the law."

The observation was made by the Bench of Justice PS Narasimha and Justice Alok Aradhe, which set aside the judgments of the NCLAT and the NCLT after finding that they had relied on AI-generated, fake citations.

The bench heard an appeal arising from an insolvency proceedings initiated by Jammu and Kashmir Bank Ltd. under Section 7 of the Insolvency and Bankruptcy Code against Essel Infraprojects Ltd. (EIL), which had executed a corporate guarantee in respect of credit facilities extended to Pan India Utilities Distribution Company Ltd.

The NCLT, Mumbai, admitted the insolvency application on 28 August 2024, recording a default of ₹87.43 crore. The NCLAT subsequently affirmed the admission order on 11 September 2025.

'No decision in the eyes of the law'

The bench held that any decision tainted by fabricated or hallucinated precedents is "no decision in the eyes of law" and must be set aside to preserve the integrity of the judicial process.

"It is necessary for Courts to adopt a zero-tolerance mode for producing, citing or using AI-generated precedents without verification. It is a misconduct on the part of an advocate to cite such judgments without verification," the bench was quoted by Live Law as saying.

"Equally, it is a serious lapse if a judge relies on such a fake or hallucinated AI-generated material as precedents in support of the determination," it added.

The court added, "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."

"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 Supreme Court said.

"It is absolutely necessary to maintain integrity in decision making, and we reiterate and declare zero tolerance for the Bar as well as the Bench to cite, refer to, or rely on such material," the court said.

It also clarified that "our judgment shall have no bearing on the rightful use of AI, but on the presentation or reliance on fake or hallucinated material as if it were a court precedent."

The Supreme Court reportedly directed the Bar Council of India (BCI) to set up a committee to examine the use of AI in legal practice and adjudication. According to the Times of India, the court said there was a clear need for regulatory safeguards, and also urged both the Bar and the Bench to exercise caution while using such technology.

The bench questioned the judicial propriety of the NCLAT, noting that, despite being an Appellate Tribunal, it could not escape the scrutiny of the non-existent judgment cited by the tribunal.

"What about the Appellate Tribunal? The fake, non-existent judgments escaped scrutiny by the first statutory appellate tribunal. Today's courts and tribunals implicitly trust lawyers when referring to precedents cited before them," the Supreme Court said.

"Imagine the hardship of a situation in which the Court must verify the authenticity of each judgment cited by an advocate," the court observed, stressing that "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."