Holding

A decision of a court or adjudicating authority based on material that is fake and hallucinated is not a decision at all and must be set aside.

Summary

The appellant, a suspended director of Essel Infraprojects Ltd., was a corporate guarantor for a loan taken by Pan India Utilities Distribution Company Ltd. from Jammu and Kashmir Bank. The bank filed a Section 7 insolvency petition before the NCLT, which was admitted, and the appellant's appeal before the NCLAT was dismissed on the basis of several cited judgments. It was later discovered that the judgments relied upon by the NCLT and NCLAT were non‑existent AI‑generated hallucinations. The Supreme Court held that a decision based on such fake material is not a valid decision and subverts the rule of law. Consequently, the Court set aside the NCLT and NCLAT orders, restored the Section 7 application, directed its expeditious disposal, and instructed the Bar Council of India to formulate guidelines to prevent the use of fabricated AI‑generated precedents.

Issues considered

Whether a decision of a court or adjudicating authority based on AI‑generated fake or hallucinated material is a valid decision under law
Whether such a decision should be set aside and what remedial measures are appropriate

Legislation cited

Headnote

Issue for Consideration Whether a decision of a Court or adjudicating authority based on material which is fake and hallucinated is a valid decision or it amounts to subversion of the rule of law. Headnotes† Artificial Intelligence – Artificial Intelligence Hallucination – AI of adjudication – Tribunal relied on non-existent, fake and hallucinated material, generated through Artificial Intelligence (AI), as if it were a precedent in support of its judgment – Correctness: Held: Respondent No. 1 has filed an affidavit indicating that the alleged judgments

Subjects

Artificial intelligenceAI HallucinationFake Judicial PrecedentsHuman-in-the-LoopUnverified Digital Legal ToolsSubversion of Rule of LawProfessional MisconductZero Tolerance Policy

Judgment

[2026] 7 S.C.R. 571 : 2026 INSC 668

Pooja Ramesh Singh
v.
Jammu and Kashmir Bank Ltd. & Anr.
(Civil Appeal No. 11950 of 2025)
02 July 2026
[Pamidighantam Sri Narasimha and Alok Aradhe, JJ.]

Issue for Consideration
Whether a decision of a Court or adjudicating authority based on
material which is fake and hallucinated is a valid decision or it
amounts to subversion of the rule of law.

Headnotes†
Artificial Intelligence – Artificial Intelligence Hallucination –
AI technology in aid of adjudication – Tribunal relied on
non-existent, fake and hallucinated material, generated through
Artificial Intelligence (AI), as if it were a precedent in support
of its judgment – Correctness:
Held: Respondent No. 1 has filed an affidavit indicating that the
alleged judgments relied on by NCLT were not cited by its counsel
at the bar – The affidavit also indicates that the so-called precedents
relied on by the adjudicating authority were obtained through its
own research – The fake, non-existent judgments escaped scrutiny
by the first statutory appellate tribunal – Judicial process and the
judgment under challenge are tainted by the usage of materials
which are said to be precedents, but in reality, they are unreal, fake,
and do not exist at all – A decision of a Court or an adjudicating
authority based on material which is fake and hallucinated is no
decision at all, and it amounts to subversion of the rule of law –
Such a decision is unsustainable – Thus, the judgment and orders
passed by the NCLT and NCLAT dated 28.08.2024 and 11.09.2025
are hereby set aside. [Paras 16, 17, 18]
Artificial Intelligence – Artificial Intelligence Application –
Control over the application and usage of AI – Discussed. [Para 5]
Artificial Intelligence – Artificial Intelligence in aid of
Adjudication – The Courts to adopt a zero-tolerance mode for
producing, citing or using AI-generated precedents without
verification – Discussed. [Para 7]
572 [2026] 7 S.C.R.

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Artificial Intelligence – Artificial Intelligence in Legal system –
Adoption of AI technology in aid of adjudication – Requirement
of a human loop at every stage. [Para 1]

Artificial Intelligence – Artificial Intelligence Hallucination –
Directions issued:
Held: The Bar Council of India, being the apex statutory body,
directed to constitute a committee and deliberate on this issue
of members of the bar submitting such fake and hallucinated
material before the Court as if they are precedents of law – The
Bar Council must take up this issue with utmost seriousness,
deliberate earnestly, and prescribe a guiding principle to prevent
such occurrences, along with the disciplinary action that will follow
a violation of the norms. [Para 9]

Case Law Cited
M. Subramaniam v. S. Janaki (2020) 16 SCC 728 : 2020 SCC
OnLine SC 341 – referred to.

List of Websites
SRA approves first AI-driven law firm (Solicitors Regulation
Authority, 2025) https://www.sra.org.uk/news/news/press/2025-
press-releases/garfield-ai-authorised/
Karl Flinders, ‘Artificial intelligence-based law firm wins in court’
(Computer Weekly, 2026) https://www.computerweekly.com/
news/366644941/Artificial-intelligence-based-law-firm-wins-in-
court
‘Pinsents’ botched AI use sparks dependency alarm’ (Law Society
Gazette, 2026) https://www.lawsociety.ie/gazette/top-stories/2026/
may/pinsents-botched-ai-use-sparks-dependency-alarm/

List of Acts
United Kingdom Legal Services Act 2007; Insolvency and
Bankruptcy Code, 2016.

List of Keywords
Artificial intelligence; AI Hallucination; Fake Judicial Precedents;
Human-in-the-Loop; Unverified Digital Legal Tools; Subversion
[2026] 7 S.C.R. 573

Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Anr.

of Rule of Law; Professional Misconduct; Zero Tolerance Policy.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11950
of 2025
From the Judgment and Order dated 11.09.2025 of National
Company Law Apellate Tribunal at Delhi in CAAT(I) No. 1808 of
2024.

Appearances for Parties
Advs. for the Appellant(s):
Ms. Madhavi Divan, Sr. Adv., Vishesh Vijay Kalra, Ms. Smriti
Churiwal, Atharva Kotval, Ms. Sonia Sharma, Ms. Simran Shadija,
Jaiveer Kant, Ms. Vidisha Jain, Ms. Meher Thapar, Ridhima
Lahariya.
Advs. for the Respondent(s):
M/s Dua Associates, Sumesh Dhawan, Rajdeep Panda, Ms. Sanjna
Dua, Ms. Anjali Sharma, Mandeep Singh Vinaik, Deepak Bashta,
Ms. Shagun Matta.

Judgment / Order of the Supreme Court

Judgment

1. This is yet again a case where the Tribunal relied on non-existent, fake
and hallucinated material, generated through Artificial Intelligence1
(AI), as if it were a precedent in support of its judgment. For the
reasons to follow, we have set aside the judgment of NCLT, as well
as the judgment in appeal, to affirm and maintain the integrity of the
adjudication and its processes. More than the inevitable consequence
of setting aside such judgments, what is significant for our decision-
making is our resolve to adopt AI technology in aid of adjudication,
while at the same time asserting and declaring total and absolute
control over adjudication, with a human in the loop at every stage.
2. Artificial Intelligence has acquired the capability to better, if not
fully substitute, human effort, both routine and intellectual. This

1 Also referred to as ‘AI’.
574 [2026] 7 S.C.R.

Supreme Court Reports

extraordinary capability, amid increased workloads of modern life,
is compelling professionals to adapt and employ AI for intelligent,
efficient and swift functioning. The Solicitors Regulation Authority
(SRA), a body created under the United Kingdom Legal Services Act
20072, approved in 2025, the first purely Artificial Intelligence-driven
law firm named Garfield Law Limited (GLA), to provide regulated
legal services3. Further, that AI law firm (GLA) is now reported to
have successfully navigated the legal system, securing a county
court decree in a suit for recovery of unpaid fee4. The result can be
gratifying, even inspiring; yet if left unregulated, Artificial Intelligence
may infiltrate our intellectual work ethic and, before long, render us
dependent on its vast capabilities.
3. Dependency on technology has never been a problem for the
dispensation of justice, as our courts have seamlessly absorbed
technologies and made them an integral part of court systems.
The story of AI, as it is unfolding, is, however, different, in fact,
transformative, as it is not just an aid to assist us in our work, but
is an alternative to our own thinking, reasoning and even decision
making. This is where we need to be extra cautious, as unregulated
use of AI will insidiously enter legal practice, the process of judicial
decision-making and decision-making itself.
4. Wisdom and foresight compel us to recognise human vulnerability to

2 SRA acts as the independent regulator of solicitors for creating an effective deterrent and discouraging
professional misconduct by solicitors. A range of sanctions is available to the SRA, including prosecuting
more severe cases at the Solicitors Disciplinary Tribunal.
3 SRA approves first AI-driven law firm (Solicitors Regulation Authority, 2025) <https://www.sra.org.uk/
news/news/press/2025-press-releases/garfield-ai-authorised/>. As per SRA News Bulletin, Garfield Law
was approved after checking its compliance on various parameters. The bulletin indicated:-
“Before authorising Garfield Law, we engaged with the owners to consider the firm’s
processes and assure ourselves that our rules can be met by an AI service. For instance,
we have sought reassurance that there are appropriate processes in place to quality-check
work, keep client information confidential, and safeguard against conflicts of interests.
We have also checked the firm is managing the risk of ‘AI hallucinations.’ The system
will not be able to propose relevant case law, which is a high-risk area for large language
model machine learning.
Garfield is not autonomous and will only take a step where the client has approved it, and
furthermore there are supervision and monitoring processes in place. This includes greater
oversight of claims in the initial launch phase, so that issues or risks can be identified.
Under our rules, named regulated solicitors will still ultimately be accountable for the firm
delivering high professional standards. This means they will also be responsible for all the
system outputs and for anything that goes wrong. All regulated law firms must also have a
minimum level of insurance in place to protect clients.”
4 Karl Flinders, ‘Artificial intelligence-based law firm wins in court’ (Computer Weekly, 2026) <https://www.
computerweekly.com/news/366644941/Artificial-intelligence-based-law-firm-wins-in-court>.
[2026] 7 S.C.R. 575

Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Anr.

seek comfort in delegation, but if thinking is delegated and it forms
a habit, it will have serious consequences for the core of human
existence, which lies in its capacity to think – to discern the distinction
between what is right and what is wrong, truth and falsehood, virtue
and vice, dharma and adharma. This capability is neither given nor
superimposed by birth, but arises from a deliberate, disciplined, and
systematic training of the mind alongside lived experiences; it is a
battle of the mind against bewitchment caused by the uncertainties
between fact and fiction, what is real and what is unreal, propriety
and impropriety, as well as what is just and unjust. This intellectual
exercise, coupled with experience and foresight, enables us to
choose between competing values, as well as to take hard decisions
with courage and conviction, and to bring about a beautiful balance
between the need for order and the quest for justice. A struggle to
arrive at truth, it is a Saadhana. In fact, the secret is in the Saadhana
itself, for without this deliberate, conscious, and continuous practice
of scientific temper, we lose the capability to discriminate between
what is right and what is wrong. Lose this, and we would have lost
everything.
5. It is therefore compelling and necessary to have absolute and total
control over the application and usage of AI. The control lies in being
two steps ahead of its application and in making deliberate choices
about when and where to apply. We are aware that this is not an
issue that can be resolved through judicial orders and declaratory
judgments, but only through Public Policy and enforceable Rules and
Regulations. We are also aware that the process has commenced,
the Regulations are being deliberated, and they will be notified after
due process and in due course. The real success is, however, not in
the making of the Rule or Regulation, but to be found in the power
of the will of the Bar as well as the Bench, to harness this science
and apply it with care and caution. No other facet of law and its
practice has ever demanded a higher and deeper corroboration
and coordination between the Bar and the Bench than the need to
identify, decide, and apply AI to adjudication and the determination
of disputes.
6. At the same time, it is necessary to clarify the position of law regarding
a certain trait in AI’s responses, a tendency to generate non-existent,
fake, or hallucinated results when replying to a prompt. We are
neither concerned with the cause nor with the process of resolving
576 [2026] 7 S.C.R.

Supreme Court Reports

such hallucinations; it is for the engineers and scientists to deal
with them. For us, i.e., for those in the province of adjudication and
determination of disputes, this by-product of AI, i.e., the production
of fake, non-existent, and hallucinated material and its utilisation as
precedents in law, is like the release of methyl isocyanate in the
province of law and justice: invisible, insidious, and catastrophic by
the time anyone notices. It not only contaminates but takes away
the very lifeblood of judicial determination.
7. It is necessary for Courts to adopt a zero-tolerance mode for
producing, citing or using AI-generated precedents without verification.
It is a misconduct on the part of an advocate to cite such judgments
without verification. Equally, it is a serious lapse if a judge relies on
such a fake or hallucinated AI-generated material as precedents in
support of the determination. We have no hesitation in declaring that
such a decision is no decision in the eyes of the law, irrespective of
whether such material had a direct or indirect bearing on the decision-
making. Such decisions are to be set aside even if an iota of fake
or hallucinated material enters the decision-making process, as it
would violate the sanctity of adjudication. It is absolutely necessary
to maintain integrity in decision-making, and we reiterate and declare
zero tolerance for the Bar as well as the Bench to cite, refer to, or rely
on such material. It is also clarified that our judgment shall have no
bearing on the rightful use of AI, but on the presentation or reliance
on fake or hallucinated material as if it were a court precedent.
8. We are aware that mere declaration of prohibitory action is not
sufficient; there must be a consequential action following accountability.
9. So far as the responsibility of the bar is concerned, we direct the
Bar Council of India, being the apex statutory body, to constitute
a committee and deliberate on this issue of members of the bar
submitting such fake and hallucinated material before the Court as if
they are precedents of law. The Bar Council must take up this issue
with utmost seriousness, deliberate earnestly, and prescribe a guiding
principle to prevent such occurrences, along with the disciplinary
action that will follow a violation of the norms.
10. Returning to the facts of the case, it is noted that the appellant is a
suspended director of Essel Infraprojects Ltd. (‘EIL’), the corporate
debtor and corporate guarantor of the original borrower, namely Pan
India Utilities Distribution Company Ltd. (‘PIUDCL’). PIUDCL had
[2026] 7 S.C.R. 577

Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Anr.

availed certain loan facilities from Jammu and Kashmir Bank Limited,
Respondent No. 1. To secure these credit facilities, a corporate
guarantee was executed by EIL. In due course, PIUDCL experienced
severe financial stress and failed to maintain its repayment schedules,
leading to the classification of its loan accounts as non-performing
assets.
11. Following continuous defaults, Respondent No. 1 filed an application
under Section 7 of the Insolvency and Bankruptcy Code, 2016, before
the National Company Law Tribunal, Mumbai, seeking initiation of
the corporate insolvency resolution process against the EIL/corporate
debtor for recovery of its outstanding financial debt.
12. The National Company Law Tribunal examined the submissions
and, upon finding the existence of debt and default, passed an order
dated 28.08.2024 admitting the Section 7 application, appointing an
Interim Resolution Professional, and declaring a moratorium under
Section 14 of the Insolvency and Bankruptcy Code, 2016. Aggrieved
by the admission order, the appellant preferred an appeal before
the National Company Law Appellate Tribunal in Company Appeal
(AT) (Insolvency) No. 1808 of 2024. Before the appellate tribunal,
the appellant contended that the NCLT erred by failing to consider
that its liabilities had been transferred to another company due to a
scheme of demerger and a subsequent amalgamation. The appellant
further contended that a renewed sanction letter dated 18.11.2017
did not mention the guarantee and therefore, the guarantee was
deemed to have been relinquished.
13. By the impugned final judgment and order dated 11.09.2025, the
NCLAT has dismissed the appeal, confirming the observations of
the NCLT by observing that while it is not disputed that there were
internal adjustment by the ESSL group by way of demerger/merger/
amalgamation, it has no effect insofar as the liability of the corporate
guarantor is concerned because it has been categorically mentioned in
clause 8 of the guarantee deed that guarantee will not be determined
on event of absorption/amalgamation of corporate debtor with any
other company.5 The NCLAT also referred to judgments relied upon

5 Clause 8: “this guarantee shall not be determined and not in any way prejudiced by any absorption or
by any amalgamation of the guarantor company with any other company, shall incur and be available to
the Bank till such time the loan accounts of the borrower company is adjusted in the books of accounts
of the bank.”
578 [2026] 7 S.C.R.

Supreme Court Reports

by the NCLT in paragraph 12 of its opinion in the following manner:
“12. The Tribunal did not accept the contention of the CD
and while referring to the decisions of the Hon’ble Apex
Court in the case of State Bank of India Vs. M/s Shree
Ram Urban Infrastructure Ltd., 2020 SCC OnLine SC 341,
Everest Kento Cylinders Ltd. Vs. Union of India (2015)
2 SCC 1, ICICI Bank Ltd. Vs. Urban Infrastructure Real
Estate Ltd., (2019) 16 SCC 528, V.S Dempo & Co. Ltd.
Vs. Reliance Communications Ltd., (2021) 10 SCC 176,
Canara Bank Vs. N.G. Subbaraya Setty & Anr., (2018)
16 SCC 228 and Sarbjit Singh Vs. Union Bank of India,
(2022) 7 SCC 464 held that the guarantee given by the
CD shall still exist and will not be effected where the two
orders referred to herein above passed by the Bombay
High Court and admitted the petition because debt and
default was not denied.”
14. Aggrieved by the said decision, the appellant has preferred the present
appeal. Ms. Madhavi Divan, learned senior counsel appearing for
the appellant, at the outset, pointed out that the citations/judgments
relied upon by the NCLT to arrive at the impugned findings, as
referred by the appellate tribunal in paragraph 12 of its opinion, are
fake and non-existent, probably AI-generated. It is pointed out that
even where case citations are accurate, the excerpted paragraphs
from the judgment(s) are not traceable to those judgments in law
reports. Ms. Divan also advanced brief arguments on the merits of
the matter. The learned counsels appearing for the respondents
have countered the submissions on merits.
15. It is not in dispute that the judgments relied upon by the NCLT are non-
existent, and some AI-generated paragraphs are wrongly attributed
to genuine citations. An independent examination undertaken by
us reveals the following about the judgments relied upon by the
adjudicating authority: State Bank of India v. M/s Shree Ram
Urban Infrastructure Ltd., 2020 SCC OnLine SC 341 (cited in
para 44 of NCLT judgment) – Wrong citation of an existing reported
judgment6 and a non-existent paragraph, Everest Kento Cylinders

6 Correct cause title for the cited judgment is M. Subramaniam v. S. Janaki, (2020) 16 SCC 728; 2020 SCC
OnLine SC 341.
[2026] 7 S.C.R. 579

Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Anr.

Ltd. v. Union of India (2015) 2 SCC 1 (cited in para 45 of NCLT
judgment) – Correct citation but non-existent paragraph, ICICI Bank
Ltd. v. Urban Infrastructure Real Estate Ltd., (2019) 16 SCC 528
(cited in para 47 of NCLT judgment) – Non-existent citation, V.S.
Dempo & Co. Ltd. v. Reliance Communications Ltd., (2021)
10 SCC 176 (cited in para 49 of NCLT judgment) – Non-existent
citation, Canara Bank v. N.G. Subbaraya Setty & Anr., (2018) 16
SCC 228 (cited in para 51 of NCLT judgment) – Correct citation
but non-existent paragraph and Sarbjit Singh v. Union Bank of
India, (2022) 7 SCC 464 (cited in para 53 of NCLT judgment) –
Non-existent citation.
16. Respondent No. 1 has filed an affidavit indicating that the alleged
judgments relied on by NCLT were not cited by its counsel at the bar.
The affidavit also indicates that the so-called precedents relied on by
the adjudicating authority were obtained through its own research.
What about the Appellate Tribunal? The fake, non-existent judgments
escaped scrutiny by the first statutory appellate tribunal. Today’s courts
and tribunals implicitly trust lawyers when referring to precedents cited
before them. Imagine the hardship of a situation in which the Court
must verify the authenticity of each judgment cited by an advocate.
17. Judicial process and the judgment under challenge are tainted
by the usage of materials which are said to be precedents, but in
reality, they are unreal, fake, and do not exist at all. A decision of a
Court or an adjudicating authority based on material which is fake
and hallucinated is no decision at all, and it amounts to subversion
of the rule of law. Such a decision is unsustainable and has to be
set aside at the earliest7.
18. For the reasons stated above, the judgment and orders passed by

7 A prominent law firm of UK Pinsent Masons LLP utilised an internal artificial intelligence program
carelessly during a block transfer application. In that instance, a junior associate accepted a completely
fabricated statutory quote generated by the software without verifying it against authoritative legal texts,
a critical error that went entirely unnoticed by the supervising partners. When the High Court questioned
the non-existent text, the firm compounded the issue by submitting a subsequent letter containing an
unconvincing, misleading explanation engineered by the software to mask the initial hallucination.
Although the presiding judge ultimately desisted from instituting formal contempt of court proceedings
due to a lack of deliberate dishonest intent, Anthony Malcolm Cork & Anor v. Mark Smith, [2026] EWHC
1199 (Ch), the reckless oversight wasted judicial resources, prompted a public admonishment from the
bench, and forced the clients to transfer their matter to new legal representatives. Eventually, Pinsent
also referred itself to the SRA for a formal investigation by the regulatory body- ‘Pinsents’ botched AI
use sparks dependency alarm’ (Law Society Gazette, 2026) <https://www.lawsociety.ie/gazette/top-
stories/2026/may/pinsents-botched-ai-use-sparks-dependency-alarm/>.
580 [2026] 7 S.C.R.

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the NCLT and NCLAT dated 28.08.2024 and 11.09.2025 are hereby
set aside. In view of the above, the Section 7 application, RCP (IB)
6/MB/2023, is restored to its original number.
19. The NCLT shall proceed with the said application and pass orders in
accordance with law. We make it clear that we have not expressed any
opinion on the merits of the case. It is for the adjudicating authority
to consider the facts and circumstances of the case to decide the
case on its own merits.
20. In view of the fact that the Section 7 application was filed long back,
it is directed that the adjudicating authority shall take up and dispose
of the said application expeditiously, preferably within a period of two
weeks from today. Pending disposal of the said Section 7 application,
the parties are directed to maintain the status quo as of today.
21. The appeal is disposed of in the above terms. Pending IAs, if any,
are disposed of accordingly.

Result of the case: Appeal disposed of.

†
Headnotes prepared by: Ankit Gyan