NCLT order struck down for relying on AI-hallucinated case law
The Supreme Court of India struck down an NCLT order that had cited six judicial precedents, three of which were entirely hallucinated by an AI system and three of which were genuine judgments with fabricated or misattributed passages. The court found that reliance on AI-generated fake case law fundamentally undermines judicial decision-making.
What happened
The National Company Law Tribunal (NCLT) passed an order citing six judicial precedents while rejecting objections by Essel Infraprojects Ltd against insolvency proceedings initiated against it as a corporate guarantor. The order was struck down by the Supreme Court of India on July 2, which found that all six cited judgments were either hallucinated or misquoted.
Reported impact
Three of the cited judgments—ICICI Bank Ltd v Urban Infrastructure Real Estate Ltd (2019), V S Dempo & Co Ltd v Reliance Communications Ltd (2021), and Sarbjit Singh v Union Bank of India (2022)—did not exist. Two others, Everest Kento Cylinders Ltd v Union of India (2015) and Canara Bank v N G Subbaraya Setty (2018), were genuine but contained passages not found in the actual judgments. The sixth judgment, State Bank of India v M/s Shree Ram Urban Infrastructure Ltd (2020), corresponded to a different case and the quoted passage did not appear in it either.
Index analysis
The Supreme Court bench observed that AI-generated fake, non-existent, and hallucinated material used as precedents in law is 'invisible, insidious, and catastrophic' and 'contaminates but takes away the very lifeblood of judicial determination.' The court held that a decision built on fabricated case law is no decision at all and must be set aside even if an iota of fake or hallucinated material enters the decision-making process.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.