Karnataka High Court Reviews Trial Court's Alleged Use of Non-Existent Judgments in Commercial Dispute Case

The Karnataka High Court is reviewing a petition challenging a trial court's decision that allegedly referenced non-existent judgments from higher courts. The trial court's order, dated November 25, 2024, is under scrutiny for citing fabricated case citations. The high court has paused further actions by the trial court until February 5, when more clarity on the use of AI-generated legal research in rulings is expected.

Senior advocate Prabhuling K Navadgi, representing Sammaan Capital Limited, argued that the trial court relied on judgments that do not exist. He stated, "If such non-existent judgments are relied upon, it is a sorry state of affairs. Sometimes AI-generated research gives wrong conclusions." The case involves a commercial dispute with Mantri Infrastructure Private Limited over alleged debt non-payment.

AI-Generated Research Concerns

The contentious order cited cases such as M/s. Jalan Trading Co., Pvt. Ltd. Vs Millenium Telecom Ltd., and others, which the petitioners claim do not exist. These references were not introduced as evidence by either party during the hearing, raising questions about the trial court’s credibility. This situation has sparked a debate on the reliability of AI-generated legal research in court proceedings.

The plaintiffs initially filed a commercial suit but withdrew it without permission to refile. They later filed a new suit under civil jurisdiction seeking injunctions against SARFAESI and NCLT proceedings and a declaration that their debts were discharged. The trial court rejected the defendants’ application to return the plaint, leading to the current high court challenge.

Legal Community Reactions

Supreme Court lawyer Vamshi Polsani criticised reliance on AI for legal work, stating, "A lawyer’s analysis, research, and framing of arguments cannot be delegated to software or technology. AI can’t be depended upon." Advocate Vishwaja Rao shared similar concerns, emphasising that AI should enhance efficiency but not compromise accuracy.

Former Telangana High Court judge Challa Kodanda Ram acknowledged AI's potential benefits but cautioned against its pitfalls. He noted that while AI often gets legal principles right, it can mix up citations. He added that if the principle is correct, citation errors should not affect outcomes.

The case highlights ongoing discussions among legal professionals about unverified AI-generated research risks in judicial processes. As the high court continues its review, the legal community awaits further developments on how AI influences case rulings and judicial decisions.