📋 Editorial Notes
Question(s):
(i) Whether the judgments of the NCLT and NCLAT, which relied on six AI-generated citations later found to be either wholly non-existent or attributed with non-existent paragraphs, can be sustained in law.
(ii) What directions are needed to prevent members of the Bar from citing or relying on AI-generated fake or hallucinated material as precedent, and what consequence follows for a decision tainted by such material.
Factual Background:
The Appellant is a suspended director of Essel Infraprojects Ltd. ("EIL"), the corporate debtor and corporate guarantor of the original borrower, Pan India Utilities Distribution Company Ltd. ("PIUDCL"). PIUDCL took loan facilities from Jammu and Kashmir Bank Ltd., Respondent No. 1, secured by a corporate guarantee executed by EIL. PIUDCL later defaulted, and its loan accounts were classified as non-performing assets.
Respondent No. 1 filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) before the NCLT, Mumbai, seeking initiation of the corporate insolvency resolution process against EIL. The NCLT admitted the application on 28.08.2024, appointed an Interim Resolution Professional, and declared a moratorium under Section 14 of the Code. The appellant challenged the admission order before the NCLAT, disputing her liability as guarantor.
The NCLAT dismissed the appeal on 11.09.2025. In support of its finding, the NCLAT referred to six judgments the NCLT had relied on.
Before the Supreme Court, Senior Counsel for the appellant pointed out that the citations relied on by the NCLT, as reproduced by the NCLAT, were fake and non-existent, and appeared to be AI-generated. Even where a citation was genuine, the paragraphs extracted from it could not be traced to the actual judgment.
Decision of the Supreme Court:
The Supreme Court set aside the judgments and orders of the NCLT and the NCLAT, holding that a decision based on fake or hallucinated material is no decision in the eyes of the law. The Section 7 application was restored to its original number and remitted to the NCLT for fresh disposal on merits. The Court declared zero tolerance for the Bar and the Bench citing or relying on AI-hallucinated material as precedent without verification, and directed the Bar Council of India to constitute a committee to address the issue.
(i) Whether the judgments of the NCLT and NCLAT, which relied on six AI-generated citations later found to be either wholly non-existent or attributed with non-existent paragraphs, can be sustained in law.
(ii) What directions are needed to prevent members of the Bar from citing or relying on AI-generated fake or hallucinated material as precedent, and what consequence follows for a decision tainted by such material.
Factual Background:
The Appellant is a suspended director of Essel Infraprojects Ltd. ("EIL"), the corporate debtor and corporate guarantor of the original borrower, Pan India Utilities Distribution Company Ltd. ("PIUDCL"). PIUDCL took loan facilities from Jammu and Kashmir Bank Ltd., Respondent No. 1, secured by a corporate guarantee executed by EIL. PIUDCL later defaulted, and its loan accounts were classified as non-performing assets.
Respondent No. 1 filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) before the NCLT, Mumbai, seeking initiation of the corporate insolvency resolution process against EIL. The NCLT admitted the application on 28.08.2024, appointed an Interim Resolution Professional, and declared a moratorium under Section 14 of the Code. The appellant challenged the admission order before the NCLAT, disputing her liability as guarantor.
The NCLAT dismissed the appeal on 11.09.2025. In support of its finding, the NCLAT referred to six judgments the NCLT had relied on.
Before the Supreme Court, Senior Counsel for the appellant pointed out that the citations relied on by the NCLT, as reproduced by the NCLAT, were fake and non-existent, and appeared to be AI-generated. Even where a citation was genuine, the paragraphs extracted from it could not be traced to the actual judgment.
Decision of the Supreme Court:
The Supreme Court set aside the judgments and orders of the NCLT and the NCLAT, holding that a decision based on fake or hallucinated material is no decision in the eyes of the law. The Section 7 application was restored to its original number and remitted to the NCLT for fresh disposal on merits. The Court declared zero tolerance for the Bar and the Bench citing or relying on AI-hallucinated material as precedent without verification, and directed the Bar Council of India to constitute a committee to address the issue.
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📄 Judgement PDF
POOJA RAMESH SINGH vs JAMMU AND KASHMIR BANK LTD.pdf · 444 KB