I'm guessing he means if he leads an army (that has won a battle and gotten lord prisoners) to a town, the AI lords in his army put their prisoners into the dungeon of the town. I think this is working as intended and the AI want prisoners... in prison. They wont escape as fast, it is better for them. The AI will also drop prisoner off into your towns the same way and you'll get the ransom money for it. My town Chaikand is often making a lot of money from everyone fighting the khuzaits and dropping prisoners off, even though I'm at peace with everyone. It's really funny to come home and see all these lords who are at war with each other, stuck together in my prison.
If they're your personal prisoners, in your party, then that might be a bug, but I actually don't know.