The Supreme Court set aside insolvency orders from both the NCLT and NCLAT after discovering that several of the case citations the NCLT relied on to reject a corporate guarantor's defense were fake, non-existent, or contained fabricated quotations — apparently generated by artificial intelligence — declaring that any decision tainted even slightly by such hallucinated material is 'no decision at all' and directing the Bar Council of India to address the growing problem of unverified AI-generated citations in court filings.
"My company was pulled into insolvency proceedings as a corporate guarantor after the original borrower defaulted on its loans. I argued that our liabilities had actually shifted to another entity through a corporate restructuring, and that a later sanction letter didn't even mention the guarantee anymore — meaning it should have lapsed. The Tribunal rejected all of this, citing a string of Supreme Court judgments to back up its reasoning. When we finally dug into those citations, we discovered something astonishing: several of those 'Supreme Court judgments' don't actually exist, or the specific passages the Tribunal quoted from them were never actually written by any court at all. My company's fate was decided using fake law."
Moral Universe
The appellant frames herself as a party whose legitimate legal defenses were dismissed on the strength of authority that turned out to be entirely fabricated, viewing this not as a mere technical irregularity but as a fundamental corruption of the judicial process itself.
Emotional Driver
Disbelief and alarm at discovering that a tribunal's rejection of her company's defense rested on citations that simply didn't exist, undermining any confidence that the underlying reasoning was genuinely sound.
Objective
To have the tainted insolvency orders set aside and her substantive defenses (the corporate restructuring and lapsed guarantee arguments) properly, genuinely adjudicated.
Blind Spots
The appellant's justified alarm over the fake citations focuses squarely on the integrity failure, without the case itself resolving whether her underlying substantive defenses — the effect of the demerger/amalgamation, and the significance of the 2017 sanction letter's silence on the guarantee — would actually succeed; the Supreme Court expressly declined to weigh in on those merits, leaving them for fresh adjudication.
Inherent Tensions
- —The appellant's substantive defenses (corporate restructuring, lapsed guarantee) versus the Tribunal's citation of fabricated precedent to reject them, leaving the actual merits genuinely undecided
- —The efficiency AI tools promise for legal research and drafting versus the catastrophic risk of unverified, fabricated 'precedent' silently corrupting judicial decision-making
- —Individual accountability (who actually generated or introduced the fake citations) versus the systemic question of how such material passed through both the NCLT and the appellate NCLAT without detection