Movie making is a high risk business and failure to earn profits for the investment made cannot attract the offence of cheating, the Supreme Court said in a judgment on Thursday quashing a criminal case against a film producer in Chennai. Failure to earn profits in film not cheating: SC
Deciding a case filed by V Ganesan who failed to get relief from the Madras high court, a bench of justices PS Narasimha and Manoj Misra said, “In our view, the high court overlooked that movie making is a high risk business. No one can be sure whether a movie would earn profits or would be a flop.” The high court decision came in 2023.
Ganesan was producing a movie and as he ran short of funds, he requested one S Senthil Babu to lend him money on assurance that it would be returned by a share in profits to the extent of 30%. Later, further money was lent on the promise of an additional 17% share in profits. When Babu failed to get his money and threatened to block the movie’s release, Ganesan issued two post-dated cheques of Rs.24 lakhs each which returned unpaid for insufficient funds in the account. Following this, Babu approached the police and filed a case of cheating and criminal breach of trust.
The bench said, “If one agrees to share profits in lieu of his investment in a movie, he takes the risk of a possible zero return. Thus, the nature of transaction between the parties was a crucial factor in determining whether the investor party should be allowed to bring in a criminal action or pursue civil remedies. Unfortunately, the high court overlooked this vital aspect.”
Quashing the criminal case, the court said there is nothing to indicate that Ganesan had a “dishonest intention” from the very beginning. “Had it been a case where the appellant had not made the movie despite borrowing funds to make one, an inference about existence of a dishonest intention was permissible,” justice Misra said, writing the judgment for the bench. The court found that the movie was indeed made and hence there was no element of deception.
Further, on the issue of cheques, the bench said that an offence of cheating would not be made out as those cheques were post-dated and the initial agreement was to share profit on release of the movie.”In conclusion, the allegations only disclosed a civil cause of action and the high court fell in error in not quashing the criminal proceedings. In our view, dishonour of a postdated cheque by itself is not sufficient to presume the existence of a dishonest intention on part of its drawer.”