SC quashes Essel insolvency order over fake precedents

Apex court finds tribunal relied on fake, non-existent judicial precedents generated AI

- Yash Tiwari

The Supreme Court (SC) on Thursday set aside orders passed by two insolvency courts after finding that the tribunal relied on fake, non-existent judicial precedents generated using artificial intelligence (AI) in a landmark judgment involving Essel Infraprojects Ltd.

The apex court quashed the orders of both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) that had admitted the firm into corporate insolvency, remanding the matter back to the NCLT for a fresh, fact-based adjudication.

The controversy caught the court’s eye when senior advocate Madhavi Divan, representing Essel Infraprojects Ltd, pointed out that several judgments that the NCLT had relied on either did not exist or contained passages that could not be found in the original judgments.

A bench comprising Justice Pamidi-ghantam Sri Narasimha and Justice Alok Aradhe said courts must adopt a “zero tolerance” approach toward the use of fake, AI-generated documents. The bench added that using such hallucinated material without proper verification severely threatens the integrity of the judicial process.