New Delhi, July 2 -- The Supreme Court on Thursday set aside a National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) orders after finding that the tribunal, while deciding an insolvency dispute, had relied on non-existent, fake and hallucinated precedents generated through artificial intelligence (AI) tools.

A bench of Justices PS Narasimha and Alok Aradhe said that courts must adopt a "zero-tolerance approach" towards the production, citation or use of AI-generated precedents without verification.

It held that an advocate commits professional misconduct by citing AI-generated judgments without first verifying their authenticity. The bench further said that it would be an equally serious lapse if a jud...