The sanctions record · Supreme Court of India, 2026
Gadiya v. Union of India
Vijay Ghanshyam Gadiya v. Union of India & Anr., 2026 INSC 947, Civil Appeal arising out of SLP (Civil) No. 15605 of 2026 (Supreme Court of India) · order of 2 September 2026 (Dipankar Datta and Sheel Nagu, JJ.)
Page verified 3 September 2026. Quotations are from the Court’s order, read in full from a copy bearing its neutral citation, linked below.
A penalty of more than four billion rupees was set aside. A customs officer imposed a penalty of Rs 425,27,99,100 in an order that cited case law which, the Supreme Court found on checking it, was “either non-existent or [had] fake citations”, alongside real cases that did not say what the order claimed. The Court did not reach the merits. Applying its own rule that a decision resting on hallucinated material is “no decision in the eyes of the law”, it set aside the penalty and the High Court order upholding it, and sent the matter to a different officer. No showing that the fabricated authorities affected the outcome was required.
The record
- CourtSupreme Court of India, civil appellate jurisdiction
- BenchDipankar Datta and Sheel Nagu, JJ.
- Citation2026 INSC 947, reportable
- Order2 September 2026, New Delhi, 4 pages
- BelowAdditional Commissioner of Customs, Surat, Order-in-Original of 8 October 2025; appeal dismissed by the High Court of Gujarat, 20 January 2026
- PenaltyRs 425,27,99,100 under section 114 of the Customs Act 1962, for mis-declaring natural diamonds as lab-grown to pay a lower tariff
- Decision-makerThe customs officer who wrote the Order-in-Original. Not a lawyer, not a filer
- DefectCase laws “either non-existent or have fake citations”; real cases that “do not lay down the ratio deduced therefrom”, which “appears to be a hallucination of AI”
- OutcomeHigh Court order and Order-in-Original set aside; proceedings revived for fresh decision by an officer of the same rank other than the author
- Follow-upAction against the author of the order left “to the wisdom of the appointing authority”
What the court held
“We have made the effort to individually verify whether such contention of the appellant is true. Upon verifying such judgments and articles, it does appear that the second respondent has relied upon case laws that are either non-existent or have fake citations.”
The Court then set out the governing rule from its own judgment of 2 July 2026 in Pooja Ramesh Singh v. Jammu and Kashmir Bank Ltd., 2026 INSC 668, in which the National Company Law Tribunal had relied on six authorities that were non-existent, wrongly cited or misquoted, and the appellate tribunal had confirmed the order without noticing:
“It is necessary for courts to adopt a zero-tolerance mode for producing, citing or using artificial intelligence-generated precedents without verification. It is a misconduct on the part of an advocate to cite such judgments without verification. Equally, it is a serious lapse if a judge relies on such a fake or hallucinated artificial intelligence-generated material as precedents in support of the determination. We have no hesitation in declaring that such a decision is no decision in the eyes of the law, irrespective of whether such material had a direct or indirect bearing on the decision-making. Such decisions are to be set aside even if an iota of fake or hallucinated material enters the decision-making process, as it would violate the sanctity of adjudication.”
On the use of AI in adjudication generally, the Court noted its own draft Regulations for Use of Artificial Intelligence in Courts, 2026, still to be finalised, and added: “assistance can never be substituted for adjudication. AI may well serve as training wheels but entrusting it with the pilot’s seat would be both imprudent and dangerous.”
The reliance on dubious material, the Court held, “proves fatal to the sustainability of the order imposing penalty”. The Additional Solicitor General did not join issue.
Why it matters
Most matters on this record end in a fine, a fee award or a referral against the person who filed the document. Here the person who used the tool was the adjudicator, and the consequence was not a fine on anyone. It was the voiding of a penalty of more than four billion rupees and a remand to someone else.
The rule that produced that result does not ask whether the fabricated authorities mattered. Under Pooja Ramesh Singh, a decision falls if even an iota of hallucinated material entered the process, whether or not it bore on the outcome. That is the strongest available statement of what one unverified output costs, and it binds the Bar and the Bench alike: the same judgment calls citing such material without verification misconduct by an advocate, and directs the Bar Council of India to prescribe guiding principles and the disciplinary action that will follow a breach.
Read alongside Faiz Enterprise in the Gujarat High Court two weeks earlier, where a state tax officer’s order relied exclusively on AI-generated case law, the pattern is a decision-maker’s own reasoning failing the verification test, and the remedy aimed at the decision rather than the person.
The lesson for the next decision
The Court verified the authorities itself. Under a rule that voids a decision on an iota of unverified material, the question for every adjudicator and every advocate becomes the same: which authorities were checked, against what primary source, by whom, before the order issued, and can someone other than the author confirm it. A sealed record of that verification, made when the decision is finalised, is the difference between asserting that the check happened and being able to show it.
Verification is becoming a duty. Evidence of verification is the missing layer → · See the receipt → · For institutions deploying AI →
Sources
Related
- The full sanctions record
- India: the Supreme Court’s rule, Kerala’s policy, and the draft regulations
- Faiz Enterprise, the Gujarat High Court matter two weeks earlier
- Ireland’s HC 142: the verification duty, written down in advance
- Regulayer for institutions
Checked 3 September 2026 against both Supreme Court documents, each read in full from a copy bearing the Court’s neutral citation. Information, not legal advice, and not advice on Indian law.
Information, not legal advice. Every entry is verified against the court’s own document or contemporaneous reporting; where a source is reporting rather than the document, we say so.