Source: The New Indian Express

In New Delhi, the Supreme Court quashed a National Company Law Tribunal (NCLT) order after finding that the tribunal had relied on “non-existent, fake, and hallucinated” judgment precedents that appeared to have been generated by AI tools in the Essel Infraprojects insolvency matter. The Bench comprising Justices PS Narasimha and Alok Aradhe found the NCLT had depended on fabricated precedents, set aside the tribunal’s March 18, 2026 order, and remanded the dispute for a fresh hearing with explicit direction that the tribunal decide the matter uninfluenced by the fake precedents.

The Court warned that the production and use of fabricated AI material as precedent threatens the rule of law and likened it to “the release of methyl isocyanate in the province of law and justice,” saying such contamination is invisible and catastrophic. The judgment stressed that “AI may assist research, but it cannot substitute verification,” that judges cannot delegate reasoning to software, and counsel remain accountable for filings; the Bench called for a zero‑tolerance policy across courts and tribunals against reliance on non‑existent case law.