![Order Relying on Fake AI-Hallucinated Precedents Is No Decision, NCLT Admission Set Aside: Supreme Court in Pooja Ramesh Singh v. J&K Bank [2026 INSC 668]](/assets/images/article-corporate.svg)
Quick Answer: A judgment that relies on fake, non-existent or AI-hallucinated precedents is no decision in the eyes of the law and must be set aside, even if only an iota of such material entered the decision-making. The Supreme Court set aside an NCLT order admitting a Section 7 IBC petition, and the NCLAT order affirming it, because the NCLT had relied on fake and misattributed Supreme Court judgments. The Section 7 application was restored for fresh decision, and the Bar Council of India was directed to frame norms against citing hallucinated material.
In Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Anr. (2026 INSC 668), the Supreme Court declared zero tolerance for producing, citing or relying on AI-generated precedents without verification. It held that it is misconduct for an advocate to cite such judgments without verification, and a serious lapse for a judge to rely on them, and that a decision is to be set aside even if an iota of fake or hallucinated material enters the decision-making process (paras 6–7, 17). Finding that the NCLT, Mumbai had relied on non-existent citations and paragraphs while admitting a Section 7 application against a corporate guarantor, the Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe set aside the NCLT and NCLAT orders and restored the application (paras 15–19).
Status: NCLT order dated 28.08.2024 admitting the Section 7 application and NCLAT judgment dated 11.09.2025 in Company Appeal (AT) (Insolvency) No. 1808 of 2024 set aside; Section 7 application RCP (IB) 6/MB/2023 restored for fresh decision, preferably within two weeks; status quo meanwhile; appeal disposed of (paras 12–13, 18–21).
Headnote: AI-Hallucinated Precedents Vitiate Adjudication
Insolvency and Bankruptcy Code, 2016 – Section 7 – Corporate insolvency resolution process – Corporate guarantor – Admission order – Artificial Intelligence – Fake, non-existent and hallucinated precedents – Misattributed paragraphs – Reliance by adjudicating authority – Decision a nullity – Misconduct of advocates – Bar Council of India – Integrity of adjudication – Human in the loop.
Held: (i) Courts must adopt zero tolerance for producing, citing or using AI-generated precedents without verification; it is misconduct for an advocate to cite such judgments without verification, and a serious lapse for a judge to rely on them (para 7).
(ii) A decision resting on fake or hallucinated AI-generated material is no decision in the eyes of the law, whether such material had a direct or indirect bearing on the outcome; such decisions are to be set aside even if an iota of such material enters the decision-making process (paras 7, 17).
(iii) The judgment does not affect the rightful use of AI; it concerns presenting or relying on fake or hallucinated material as if it were a court precedent (para 7).
(iv) The Bar Council of India must constitute a committee and prescribe guiding principles, along with disciplinary consequences, to prevent advocates from submitting fake and hallucinated material as precedents (paras 8–9).
(v) The NCLT relied on six judgments that were non-existent, wrongly cited or carried non-existent paragraphs, which escaped scrutiny by the NCLAT; the judicial process was therefore tainted (paras 13, 15–17).
(vi) The Section 7 application was restored for decision on merits, without any opinion of the Supreme Court on the merits (paras 18–19).
(paras 6–20)
Case Details: Pooja Ramesh Singh v. J&K Bank (2026 INSC 668)
Final Outcome: Appeal disposed of; NCLT and NCLAT orders set aside; Section 7 application restored to its original number for fresh decision; status quo pending its disposal; Bar Council of India directed to frame norms.
Case: Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd. & Anr.
Neutral Citation: 2026 INSC 668
Case No.: Civil Appeal No. 11950 of 2025
Court: Supreme Court of India (Civil Appellate Jurisdiction) – Reportable
Date of Decision: 2 July 2026
Bench: Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe (the judgment does not name its author)
Relevant Acts & Sections: Insolvency and Bankruptcy Code, 2016 – Sections 7 and 14
Impugned Orders: NCLAT judgment dated 11.09.2025 in Company Appeal (AT) (Insolvency) No. 1808 of 2024, affirming the NCLT, Mumbai order dated 28.08.2024 admitting the Section 7 application against Essel Infraprojects Ltd. (paras 11–13)
Counsel: Ms. Madhavi Divan, Senior Advocate, for the appellant (para 14)
Source: Supreme Court of India (official website)
Key Holdings of the Supreme Court
- Zero tolerance applies to the Bar as well as the Bench in citing, referring to or relying on fake or hallucinated AI-generated material (para 7).
- Citing AI-generated judgments without verification is misconduct by an advocate; relying on them is a serious lapse by a judge (para 7).
- A decision based on fake and hallucinated material is no decision at all and amounts to subversion of the rule of law (para 17).
- Such a decision must be set aside even if the fake material had only an indirect bearing on it (para 7).
- The Bar Council of India must deliberate and prescribe guiding principles and disciplinary consequences (para 9).
- The ruling has no bearing on the rightful use of AI (para 7).
Brief Facts of the Case
The appellant is a suspended director of Essel Infraprojects Ltd. (EIL), the corporate debtor and corporate guarantor for loans that Pan India Utilities Distribution Company Ltd. (PIUDCL) had taken from Jammu and Kashmir Bank Ltd. After PIUDCL defaulted and its accounts became non-performing assets, the Bank filed a Section 7 application against EIL before the NCLT, Mumbai (paras 10–11).
On 28.08.2024, the NCLT admitted the application, appointed an Interim Resolution Professional and declared a moratorium. Before the NCLAT, the appellant argued that EIL's liabilities had passed to another company through demerger and amalgamation, and that a renewed sanction letter dated 18.11.2017 did not mention the guarantee (para 12).
By the impugned judgment dated 11.09.2025, the NCLAT dismissed the appeal, relying on clause 8 of the guarantee deed and on judgments the NCLT had cited (para 13).
Before the Supreme Court, the appellant pointed out that the judgments relied upon by the NCLT were fake and non-existent, probably AI-generated, and that even where citations were accurate, the quoted paragraphs could not be traced (para 14).
Issues Before the Supreme Court
- What is the effect on a judgment of reliance on fake, non-existent or AI-hallucinated material as precedent (paras 6–7, 17)?
- What accountability measures should follow for the Bar (paras 8–9)?
- Whether the NCLT and NCLAT orders could survive given the fake citations relied upon (paras 15–18).
Court's Findings and Reasoning
AI as an alternative to thinking (paras 2–5): The Court noted that AI is not just an aid but "an alternative to our own thinking, reasoning and even decision making", and that its use must remain under absolute and total control, through public policy and enforceable rules, and through the will of the Bar and the Bench to apply it with care.
Hallucinated precedents (para 6): The Court compared the production of fake, non-existent and hallucinated material and its use as precedent to the release of methyl isocyanate in the province of law and justice, noting that it contaminates and takes away the lifeblood of judicial determination.
Zero tolerance (para 7): Citing AI-generated precedents without verification is misconduct by an advocate, and relying on them is a serious lapse by a judge. Such a decision is no decision in the eyes of the law, whether the material had a direct or indirect bearing on the decision.
Accountability of the Bar (paras 8–9): Since a mere declaration is not enough, the Court directed the Bar Council of India to constitute a committee, deliberate earnestly and prescribe guiding principles and disciplinary action for violations.
Fake citations in the NCLT order (para 15): It was not disputed that the NCLT had relied on non-existent judgments. The Court's own examination showed one wrong citation of an existing judgment with a non-existent paragraph, two correct citations with non-existent paragraphs, and three non-existent citations.
Source of the citations (para 16): The Bank filed an affidavit that its counsel had not cited these judgments and that the adjudicating authority obtained them through its own research. The fake judgments also escaped scrutiny by the NCLAT.
Decision a nullity (para 17): A decision based on fake and hallucinated material is no decision at all, amounts to subversion of the rule of law and has to be set aside at the earliest.
Final Outcome and Directions
- NCLT order dated 28.08.2024 and NCLAT judgment dated 11.09.2025 set aside (para 18).
- Section 7 application RCP (IB) 6/MB/2023 restored to its original number; the NCLT shall decide it in accordance with law on its own merits (paras 18–19).
- The NCLT shall dispose of the application expeditiously, preferably within two weeks; parties to maintain status quo meanwhile (para 20).
- No opinion expressed on the merits (para 19).
- Bar Council of India to constitute a committee and prescribe guiding principles and disciplinary consequences (para 9).
- Appeal disposed of; pending applications disposed of (para 21).
Legal Principle Laid Down
A judgment or order of a court, tribunal or adjudicating authority that relies on fake, non-existent or AI-hallucinated material presented as precedent is no decision in the eyes of the law and must be set aside, irrespective of whether that material had a direct or indirect bearing on the outcome. Citing such material without verification is misconduct on the part of an advocate, and relying on it is a serious lapse on the part of a judge (paras 7, 17).
Precedents Relied Upon
The Court did not rely on precedents for its holding. It examined the six authorities cited by the NCLT and found them fake or misattributed (para 15):
- State Bank of India v. M/s Shree Ram Urban Infrastructure Ltd., 2020 SCC OnLine SC 341 – Wrong citation and non-existent paragraph; the citation belongs to M. Subramaniam v. S. Janaki, (2020) 16 SCC 728. Discussed at para 15.
- Everest Kento Cylinders Ltd. v. Union of India, (2015) 2 SCC 1 – Correct citation, non-existent paragraph. Discussed at para 15.
- ICICI Bank Ltd. v. Urban Infrastructure Real Estate Ltd., (2019) 16 SCC 528 – Non-existent citation. Discussed at para 15.
- V.S. Dempo & Co. Ltd. v. Reliance Communications Ltd., (2021) 10 SCC 176 – Non-existent citation. Discussed at para 15.
- Canara Bank v. N.G. Subbaraya Setty, (2018) 16 SCC 228 – Correct citation, non-existent paragraph. Discussed at para 15.
- Sarbjit Singh v. Union Bank of India, (2022) 7 SCC 464 – Non-existent citation. Discussed at para 15.
- Anthony Malcolm Cork & Anor v. Mark Smith, [2026] EWHC 1199 (Ch) – Referred – UK instance of a fabricated AI-generated quote. Discussed at para 17.
Important Paragraphs of the Judgment
Verbatim extracts from the judgment. For the full text, refer to the judgment PDF below.
Para 1: "... 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."
Para 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."
Para 7: "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."
Para 16: "Imagine the hardship of a situation in which the Court must verify the authenticity of each judgment cited by an advocate."
Para 17: "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."
Para 19: "We make it clear that we have not expressed any opinion on the merits of the case."
Practical Impact of the Ruling
- For advocates: Every citation must be verified against authoritative sources; citing unverified AI-generated material is misconduct, and the Bar Council of India is to prescribe disciplinary consequences (paras 7, 9).
- For judges and tribunal members: Precedents found through independent research must be verified; reliance on hallucinated material renders the decision a nullity (paras 7, 16–17).
- For IBC litigants: An admission order resting on fake citations is liable to be set aside, though the Section 7 application will be heard afresh on merits (paras 18–20).
- For appellate forums: Appellate tribunals should check the authorities relied upon by the authority below, since the fake judgments here escaped NCLAT scrutiny (para 16).
- For AI users in law: Rightful use of AI is not affected; the bar is on presenting hallucinated material as precedent (para 7).
FAQs on AI-Hallucinated Precedents in Courts
1. What did the Supreme Court decide in Pooja Ramesh Singh v. J&K Bank?
It set aside the NCLT and NCLAT orders because the NCLT had relied on fake and non-existent precedents, and restored the Section 7 application for fresh decision (paras 15, 18–19).
2. Is a judgment relying on AI-hallucinated precedents valid?
No. It is no decision in the eyes of the law and must be set aside even if an iota of such material entered the decision-making process (paras 7, 17).
3. Is it misconduct for a lawyer to cite fake AI-generated judgments?
Yes. Citing such judgments without verification is misconduct on the part of an advocate (para 7).
4. Who supplied the fake citations in this case?
The Bank's affidavit stated that its counsel did not cite them and that the adjudicating authority obtained them through its own research (para 16).
5. Does the ruling ban the use of AI in legal work?
No. It has no bearing on the rightful use of AI, only on presenting or relying on fake or hallucinated material as precedent (para 7).
Keywords: 2026 INSC 668, Pooja Ramesh Singh v. Jammu and Kashmir Bank, AI hallucinated precedents, fake judgments, artificial intelligence in courts, Section 7 IBC, NCLT, NCLAT, corporate guarantor, Essel Infraprojects, Bar Council of India, advocate misconduct, zero tolerance, Justice P.S. Narasimha, Justice Alok Aradhe, Supreme Court judgment
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Download Judgment PDF – Pooja Ramesh Singh v. J&K Bank
Source: Supreme Court of India (official website).