New Delhi, July 3 -- The Supreme Court on Thursday said fake, non-existent and AI-generated precedents pose the same threat to the justice system that "methyl isocyanate" poses to human life- "invisible, insidious, and catastrophic by the time anyone notices." The court was referring to a National Company Law Tribunal (NCLT) judgement that cited several hallucinated precedents. Such material, the apex court added, contaminates the judicial process and strips judicial determination of "its very lifeblood." Warning against the use of artificial intelligence in court proceedings, a bench of justices PS Narasimha and Alok Aradhe set aside the judgments of NCLT and the National Company Law Appellate Tribunal (NCLAT) in an insolvency dispute after finding that the NCLT had relied on non-existent, fake and hallucinated precedents generated by AI tools and that the NCLAT had failed to detect the error while upholding NCLT's order. Proceedings in the court strongly suggested that NCLT may have relied on AI tools to write its judgement, although the bench chose to not dwell on this. The bench's reference to methyl isocyanate harks back to the Bhopal gas tragedy in 1984 that killed thousands in the world's deadliest industrial accident. The bench further said that all courts must adopt a "zero tolerance" policy for citing or relying on " fake, non-existent, and hallucinated material," generated through AI. It directed the Bar Council of India (BCI) to constitute a committee to examine the issue of lawyers placing fake or hallucinated AI-generated material before courts as though it were genuine precedent. It asked the BCI to frame guiding principles and prescribe disciplinary consequences for violations. "For us, i.e., for those in the province of adjudication and determination of disputes, this by-product of AI, i.e., the production of fake, non-existent, and hallucinated material and its utilisation as precedents in law, is like the release of methyl isocyanate in the province of law and justice: invisible, insidious, and catastrophic by the time anyone notices," the Supreme Court said. The court also said that any advocate who cites hallucinated judgments, commits professional misconduct, and that judges, who rely on such judgements or precedents, commit a serious lapse in doing so. Any decision tainted by even "an iota" of such material, the court said, is "no decision in the eyes of law" and must fall, regardless of whether or not the fake precedent influenced the final outcome. The court was hearing an appeal filed by the suspended director of a private company, challenging the orders of NCLT admitting the firm to the corporate insolvency resolution process on a Section 7 application filed under the Insolvency and Bankruptcy Code by the Jammu and Kashmir Bank. NCLT Mumbai had, on August 28, 2024, admitted the insolvency plea and on September, 2025, NCLAT had upheld the order. Senior advocate Madhavi Divan, who appeared for the appellant, however, told the court that several citations or judgements relied upon by NCLT either did not exist or contained paragraphs that no law report recorded. The court then conducted its own examination and found some citations referred to judgments that never existed. Others cited genuine cases but attributed fabricated passages to them. One citation even carried the name of an entirely different Supreme Court decision. The bank told the court that its counsel had not cited those and that the adjudicating authority had perhaps cited them through its own research....