Supreme Court sets aside NCLT, NCLAT orders over reliance on AI-generated judgements

NEW DELHI: The Supreme Court has set aside orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) after finding that the NCLT relied on fake and AI-generated "hallucinated" judicial precedents. Declaring a policy of "zero tolerance" for unverified AI-generated material in judicial decision-making, the Court held that a judgment based on fabricated precedents is "no decision in the eyes of law" and undermines the rule of law.

A Bench of Justices P.S. Narasimha and Alok Aradhe restored the insolvency proceedings involving Essel Infraprojects Ltd. to the NCLT for fresh adjudication, directing it to decide the matter within two weeks. The Court found that some authorities cited by the NCLT referred to non-existent judgements, while others contained fabricated passages falsely attributed to genuine Supreme Court decisions. It emphasized that AI may assist judicial work but cannot replace human reasoning, and that courts must retain complete control over adjudication with human oversight at every stage.

Warning of the risks posed by AI-generated misinformation, the Court mandated "zero tolerance" for citing or relying on unverified AI-generated precedents. It held that advocates who cite such material without verification commit professional misconduct, while judges who rely on it commit a serious lapse.

The Court also directed the Bar Council of India to constitute a committee to frame guidelines and recommend disciplinary measures to prevent the use of fabricated AI-generated legal authorities. Clarifying that it had expressed no opinion on the merits of the insolvency dispute, the Supreme Court ordered the parties to maintain status quo until the NCLT decides the matter afresh. (IANS)

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