Supreme Court quashes Essel insolvency order over tribunal's use of fake, AI-generated precedents
The Supreme Court of India on Thursday has set aside orders passed by two insolvency tribunals after finding that the tribunal relied on fake and
The Supreme Court of India on Thursday has set aside orders passed by two insolvency tribunals after finding that the tribunal relied on fake and 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 Company Law Tribunal (NCLT) and the 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 judgements 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 Pamidighantam 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. An independent verification conducted by the Supreme Court confirmed the issue. It found that some citations referred to entirely non-existent judgments, while others cited genuine Supreme Court decisions but included fabricated paragraphs attributed to the court. The case stems from insolvency proceedings initiated by Jammu & Kashmir Bank against Essel Infraprojects Ltd, which had acted as a corporate guarantor for loans given to another firm. Pooja Ramesh Singh, a suspended director of Essel Infraprojects, had challenged the orders admitting the company into the corporate insolvency resolution process under a Section 7 application. The Mumbai bench of the NCLT originally admitted the insolvency plea on 28 August 2024, and the NCLAT subsequently upheld that order on 11 September 2025.
Also Read | Why AI data centres are the new goldmine for Indian law firms Role of AI in courts The bench said the case raises a broader concern regarding the role of AI in legal adjudication. While clarifying they were not against using AI in legal practice or the courts, the judges drew a sharp distinction between leveraging AI as an assistive tool and allowing it to replace human judgement, “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”. The court emphasised that while AI can be used as a tool in courts, there must be absolute human control over it at every stage. It also directed the Bar Council of India to form a committee to examine the issue in detail.
The BriefWire