Artificial Intelligence and the Indian Judiciary

Fake case citations, invented by an AI tool, once helped decide who owed ₹87 crore. On 2 July 2026, the Supreme Court threw that ruling out. This article covers that landmark case, and the Court’s own draft rules for AI use in Indian courts.

Must Know

• On 2 July 2026, the Supreme Court set aside an NCLT order in the Essel Infraprojects insolvency matter. A Bench of Justices P.S. Narasimha and Alok Aradhe found the NCLT had relied on AI-hallucinated, fake case citations.
• The Bench held that courts must take a “zero-tolerance” approach to hallucinated AI citations. Even a small amount of fabricated material is enough to void a decision, since it strikes at the integrity of adjudication.
• The Court also found misconduct by the advocate who submitted the fake material, and directed the Bar Council of India (BCI) to constitute a committee. That committee must frame guidelines on submitting AI-generated legal material.
• Separately, the Supreme Court released Draft Regulations for Use of Artificial Intelligence in Courts, 2026, for public consultation. Comments stayed open until 20 June 2026.
• The draft regulations bar AI from deciding cases, determining bail eligibility, or assessing witness credibility, unless specifically authorised by law.

Good to Know

• The underlying case began when NCLT Mumbai admitted Essel Infraprojects to the Corporate Insolvency Resolution Process (CIRP) on 28 August 2024. The order came on a Section 7 application by Jammu and Kashmir Bank Limited, over a claimed debt of ₹87.43 crore. The NCLAT upheld that order on 11 September 2025.
• The Supreme Court found several “precedents” cited in the NCLT order simply did not exist. Two examples were ICICI Bank Ltd vs Urban Infrastructure Real Estate Ltd (2019) 16 SCC 528 and Sarbjit Singh vs Union Bank of India (2022) 7 SCC 464. Both real-sounding citations were wrongly attributed to content that was never actually decided.
• Under the draft AI regulations, permitted uses include legal research, drafting assistance, hearing scheduling, transcription, translation of judgments, citation verification, and case or record management.
• Lawyers must disclose AI use in their court filings, under the draft framework.
• Once finalised, the regulations would apply to the Supreme Court and all High Courts. They would also cover every court, tribunal, and statutory commission performing adjudicatory functions.
• This judicial AI framework is separate from the executive branch’s own push on AI in Governance and Administrative Reforms in India, led by DARPG.

Test Yourself

Please wait…

1. Which two judges made up the Supreme Court Bench that set aside the NCLT’s AI-hallucinated-citation ruling?

Justices D.Y. Chandrachud and Sanjiv Khanna

Justices P.S. Narasimha and Alok Aradhe

Justices B.R. Gavai and Surya Kant

Justices Abhay Oka and J.B. Pardiwala

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Great to Know

• The ruling and the draft regulations arrived in the same window, but from different directions. The July ruling was a reactive correction, fixing a failure that had already happened. The June draft framework was proactive, an attempt to prevent similar failures before they occur.
• Hallucinated legal citations are dangerous precisely because they are plausible, not because they are obviously fake. A fabricated case name, paired with a real-looking SCC citation number, can pass a quick surface-level check. That appears to be exactly what happened in the NCLT order.
• Directing the Bar Council of India, rather than only the tribunals, targets where the actual failure originated. The fabricated citations entered the record through an advocate’s submission, not through judicial error. The fix aims at that entry point, not just at the outcome.
• This ruling is one piece of a wider AI-governance push across separate institutional tracks. IT Rules amendments now target deepfakes on online platforms (see Polity0161), while the IndiaAI Mission funds domestic AI development, with its own Safe and Trusted AI safeguards (see SciTech0033).

Current Affairs

• On 2 July 2026, the Supreme Court set aside the NCLT’s Essel Infraprojects order over AI-hallucinated citations. It set a “zero-tolerance” standard, and directed the BCI to frame guidelines. (Source: Bar and Bench)
• In June 2026, the Supreme Court placed its Draft Regulations for Use of Artificial Intelligence in Courts, 2026 in the public domain. It sought comments and suggestions until 20 June 2026.