{"id":111386,"date":"2026-07-05T10:45:43","date_gmt":"2026-07-05T05:15:43","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=111386"},"modified":"2026-07-05T12:00:58","modified_gmt":"2026-07-05T06:30:58","slug":"ai-hallucinated-judgments","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/ai-hallucinated-judgments\/","title":{"rendered":"AI Hallucinated Judgments: Supreme Court Warns Against AI-Generated Fake Case Citations"},"content":{"rendered":"<h2><b>AI Hallucinated Judgments Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Recently, the Supreme Court struck down a National Company Law Tribunal (NCLT) order. The order had relied on six court judgments as precedents.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">All six turned out to be problematic. Three judgments <\/span><b>did not exist at all<\/b><span style=\"font-weight: 400;\">. The other three either didn&#8217;t say what the tribunal claimed, or belonged to a different case entirely.<\/span><\/li>\n<\/ul>\n<h2><b>The Case Background<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In 2013, a company called Essel Infraprojects promised to repay a loan if another company failed to. This kind of promise is called a &#8220;corporate guarantee.&#8221;\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The loan itself was for Rs 200 crore. It was given by Jammu and Kashmir Bank to a different company, Pan India Utilities Distribution Company Ltd.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Later, Pan India Utilities failed to repay the loan. Since Essel had promised to pay on its behalf, the bank came after Essel under the Insolvency and Bankruptcy Code (IBC).\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Under this law, if a company cannot pay its debts, it can be taken to a special court for resolution. This is exactly what the bank did.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Essel did not argue that the loan existed or that it had gone unpaid. Those facts were not in dispute. Instead, Essel argued something different: it said it was no longer responsible for this guarantee at all.<\/span><\/li>\n<\/ul>\n<h3><b>Why did Essel say this?<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In 2014, the company had gone through a restructuring. Part of its business was separated out (this is called a &#8220;demerger&#8221;), and then merged into another company (this is called an &#8220;amalgamation&#8221;).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This restructuring was approved by the Bombay High Court. Essel claimed that when this happened, its old responsibility \u2014 including the guarantee \u2014 had passed on to the new company.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">So, Essel argued, it was no longer the one who should be held responsible.<\/span><\/li>\n<\/ul>\n<h3><b>Tribunal\u2019s Judgement<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The tribunal handling the case, called the NCLT (National Company Law Tribunal), did not accept this argument. In 2024, it rejected Essel&#8217;s defence and allowed the bank&#8217;s case to proceed.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Essel then appealed to a higher tribunal, the NCLAT (National Company Law Appellate Tribunal). But in September 2025, the NCLAT agreed with the NCLT&#8217;s decision.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Importantly, the <\/span><b>NCLAT did not check whether the case references (citations) used by the NCLT were even real<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This became a major problem later, since those citations turned out to be fake or wrongly quoted.<\/span><\/li>\n<\/ul>\n<h2><b>The Fake Citations<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Three judgments simply didn&#8217;t exist:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">ICICI Bank Ltd v Urban Infrastructure Real Estate Ltd (2019)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">V S Dempo &amp; Co Ltd v Reliance Communications Ltd (2021)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Sarbjit Singh v Union Bank of India (2022)<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Two judgments were real, but the quoted passages were not found anywhere in them:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Everest Kento Cylinders Ltd v Union of India (2015)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Canara Bank v N G Subbaraya Setty (2018)<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The sixth judgment cited was actually a different case altogether. The tribunal called it State Bank of India v Shree Ram Urban Infrastructure Ltd, but it was really M Subramaniam v S Janaki. The <\/span><b>quoted passage wasn&#8217;t in either judgment<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Importantly, neither party&#8217;s lawyers had cited these judgments. J&amp;K Bank told the Supreme Court that its counsel never referred to them.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The tribunal appears to have generated these citations through its <\/span><b>own AI-assisted research<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2><b>What the Supreme Court Said<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The SC bench used strong language. They compared <\/span><b>AI hallucination in judicial work to a toxic gas leak<\/b><span style=\"font-weight: 400;\"> \u2014 &#8220;<\/span><span style=\"font-weight: 400;\">invisible, insidious, and catastrophic by the time anyone notices<\/span><span style=\"font-weight: 400;\">.&#8221;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They warned that relying on AI could make judges dependent on it and erode independent judicial reasoning over time.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The court held that even &#8220;an iota&#8221; of fake or hallucinated material in a decision is enough to set it aside.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>A decision built on fabricated case law, the bench said, &#8220;is no decision at all.&#8221;<\/b><\/li>\n<\/ul>\n<h2><b>Wider Directions Issued\u00a0<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Supreme Court asked the Bar Council of India to set up a committee. This committee will study <\/span><b>how AI is being used in litigation across courts<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The court also warned that lawyers citing AI-generated case law without verification could face <\/span><b>professional misconduct<\/b><span style=\"font-weight: 400;\"> proceedings.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For now, the NCLT will decide the insolvency petition afresh. Both parties have been told to maintain status quo until then.<\/span><\/li>\n<\/ul>\n<h2><b>Not the First Such Incident<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The same bench had faced a similar problem in February 2026, in <\/span><b><i>Gummadi Usha Rani v Sure Mallikarjuna Rao<\/i><\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">There, an Andhra Pradesh trial court had relied on four fake AI-generated judgments.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The High Court had merely issued &#8220;a word of caution.&#8221; This time, the Supreme Court took a much harder line, calling such reliance not just an error but <\/span><b>potential &#8220;misconduct&#8221;<\/b><span style=\"font-weight: 400;\"> with legal consequences.<\/span><\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This case marks a serious warning from India&#8217;s top court on AI use in judicial decision-making. It shows that AI hallucination isn&#8217;t just a drafting inconvenience \u2014 it can invalidate an entire legal order.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Supreme Court has made clear that courts and lawyers alike carry a duty to verify every citation, and that unchecked AI use in law can silently corrode the foundation of judicial reasoning itself.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">With the Bar Council now examining the issue formally, this ruling is likely to become a key reference point for how AI tools are regulated within India&#8217;s legal system going forward.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/legal-news\/ai-hallucinated-judgments-explained-supreme-court-nclt-order-fake-precedents-10771396\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.livelaw.in\/supreme-court\/supreme-court-sets-aside-nclt-judgment-for-using-ai-hallucinated-citations-asks-bci-to-examine-issue-539616\" target=\"_blank\" rel=\"nofollow noopener\">LL<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>AI Hallucinated Judgments led the Supreme Court to set aside an NCLT order, underscoring the need to verify AI-generated case citations.<\/p>\n","protected":false},"author":18,"featured_media":111400,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[8506,60,22,59],"class_list":{"0":"post-111386","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-ai-hallucinated-judgments","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs-tag","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/111386","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=111386"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/111386\/revisions"}],"predecessor-version":[{"id":111401,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/111386\/revisions\/111401"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/111400"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=111386"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=111386"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=111386"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}