It is also worse than that, because for most dissertations, your committee is generally going to be more widely-read than the candidate, and have discussed the topic with them for years. Although the candidate may have more specific knowledge by the time they are finished writing the dissertation, the committee is going to have much broader knowledge of the field in general, and is pretty likely to be aware of the relevant prior art anyway.

A closer analogy would be saying the Ph.D candidate must be issued the degree unless a randomly chosen undergraduate can show the research wasn't sufficiently novel.