Full Judgment Text
2026 INSC 265
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1470 OF 2026
(Arising out of SLP Criminal No. 10478 of 2023)
V. GANESAN …APPELLANT
VERSUS
STATE REP BY THE SUB INSPECTOR
OF POLICE & ANR. …RESPONDENT(S)
J U D G M E N T
MANOJ MISRA, J.
1. Leave granted.
2. This appeal impugns the judgment and order of
1
the High Court at Madras dated 06.04.2023 in Crl.
O.P. No. 847 of 2021 and Crl. M.P. No. 518 of 2021,
whereby the prayer of the appellant to quash final
report and consequential proceedings in C.C. No.
Signature Not Verified
3569 of 2020 on the file of the Metropolitan
Digitally signed by
CHETAN ARORA
Date: 2026.03.19
15:55:10 IST
Reason:
1
The High Court
SLP (Crl.) No. 10478/2023 Page 1 of 16
Magistrate (CCB and CBCID, Metro Cases), Egmore,
Chennai-600008, under Section 406 and 420 of the
2
Indian Penal Code, 1860 , was partly allowed to the
extent of indictment under Section 406 IPC; however,
the prayer to quash indictment under Section 420
IPC was declined.
3. In brief, the prosecution case, as could be evinced
from the final report (i.e., police report) submitted
under Section 173 of the Code of Criminal Procedure,
3
1973 , is that the accused (the appellant herein) was
producing a ‘movie’. In the course of its production,
he ran short of funds. He, therefore, requested the
de-facto complainant (i.e., the second-respondent
herein) 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 promise of an
additional 17% share in profits. Ultimately, two post-
dated cheques of Rs.24 lacs each were issued by the
2
IPC
3
CrPC
SLP (Crl.) No. 10478/2023 Page 2 of 16
accused to the de facto complainant towards return
of the principal amount which returned unpaid for
insufficient funds in the account. Based on above, it
was alleged that the accused had cheated the
complainant and had also committed offence of
criminal breach of trust.
4. Aggrieved by the police report and the
consequential proceedings, the appellant invoked the
jurisdiction of the High Court under Section 482 of
CrPC, inter alia, to quash the report and the
consequential proceedings on the ground that a pure
civil cause of action was given colour of a criminal
offence.
5. By the impugned order, the High Court quashed
the indictment of an offence punishable under
Section 406 IPC but declined to quash the
proceedings qua the offence of cheating punishable
under Section 420 IPC.
SLP (Crl.) No. 10478/2023 Page 3 of 16
6. We have heard the learned counsel for the parties.
7. On behalf of the appellant it is submitted that
admittedly the second-respondent had invested
money in a movie project on expectation of good
returns. There is no dispute that the movie project
was completed. However, it could not generate
profits. In such circumstances, the appellant could
not fulfil its commitment of providing good returns on
the investment. Therefore, there was no dishonest
intention and the dispute between the parties is
purely civil in nature. Hence, institution and
continuation of criminal proceedings is nothing but
abuse of the process of Law.
8. Per contra , on behalf of the respondent(s) it is
submitted that dishonest intention of the appellant
was there from the very beginning which is evident
from the fact that the two cheques got dishonoured
for want of funds. Besides, on appellant’s false
SLP (Crl.) No. 10478/2023 Page 4 of 16
assurance of profits, money was lent. In these
circumstances, offence of cheating is made out.
9. We have accorded due consideration to the rival
submissions and have perused the record.
10. The police report indicted the appellant for
offences of criminal breach of trust and cheating
punishable under Sections 406 and 420 IPC
respectively. The High Court came to the conclusion,
and rightly so, that no offence punishable under
Section 406 of IPC is made out as there was no
entrustment. Regarding the offence of cheating, the
High Court concluded that prima facie it is made out.
The reasoning of the High Court in support of its
conclusions can be found in paragraph 6 of its
judgment, which is extracted below:
“This Court on perusal of the impugned final
report finds that the offence under Section 406
IPC is not made out. There is no entrustment
made to the petitioner, in order to attract the
offence of criminal breach of trust. However, this
Court finds that there was an Agreement
between the petitioner and the de-facto
complainant on 30.12.2013. The Agreement
SLP (Crl.) No. 10478/2023 Page 5 of 16
shows that the petitioner promised 30% interest
on the initial invested amount on Rs.
19,60,000/-. Thereafter, the de-facto
complainant paid Rs. 27,00,000/- on
03.04.2014; and the petitioner had promised
47% profit on the invested amount. The
petitioner had not made any payment to the de-
facto complainant/second-respondent as
promised. While so, the de-facto
complainant/second-respondent objected to the
petitioner releasing the movie. The petitioner had
given one more undertaking letter, wherein, he
had promised to pay the principal sum in two
instalments, profit on a subsequent date; and
that if the project did not yield any profit, he
would pay an interest on the said sum of Rs.
48,00,000/-. All the above facts, disclose that at
every stage, the representation has been made to
the de-facto complainant to induce him to part
with money. The allegations prima facie disclose
the offence under Section 420 IPC. In the facts of
the instant case, the question whether it was
only a breach of promise or cheating has to be
adjudicated only during trial. Therefore, this
Court is not inclined to quash the impugned
final report in so far as the offence under Section
420 IPC. Hence, the impugned final report is
quashed only in respect of offence under Section
406 IPC. However, the learned Metropolitan
Magistrate may try the case on the basis of
evidence adduced before him without being
influenced by any of the observations made in
this order. The learned Metropolitan Magistrate
(CCB and CBCID, Metro Cases), Egmore,
Chennai – 600 008 may conduct the trial as
4
expeditiously as possible ” .
11. The above extract makes it clear that the High Court
was of the view that as the money was advanced on a
promise of good returns and, subsequently, an
4
Extracted from typed copy of the judgment placed on record. May contain typographical mistakes.
SLP (Crl.) No. 10478/2023 Page 6 of 16
undertaking was also given to return the principal
amount if the project did not yield any profit, it could be
taken that the complainant parted with his money on
the inducement of the appellant and therefore, prima
facie , an offence punishable under Section 420 IPC is
made out.
5
12. In Iridium India Telecom Ltd. v. Motorola Inc. ,
this Court laid down the ingredients of an offence of
6
cheating as defined in Section 415 of IPC. It was
observed that Section 415 of IPC has two parts. The
first part makes it necessary that the deception by the
accused of the person deceived, must be fraudulent or
dishonest. Such deception must induce the person to
either: (a) deliver property to any person; or (b) consent
that any person shall retain any property. The second
part also requires that the accused must by deception
5
(2011) 1 SCC 74, paragraph 68
6
Section 415. Cheating. -- Whoever, by deceiving any person, fraudulently or dishonestly induces the
person so deceived to deliver any property to any person, or to consent that any person shall retain any
property, or intentionally induces the person so deceived to do or omit to do anything which he would
not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage
or harm to that person in body, mind, reputation or property, is said to ‘cheat’.
Explanation. --- A dishonest concealment of facts is a deception within the meaning of this section.
SLP (Crl.) No. 10478/2023 Page 7 of 16
intentionally induce the person deceived either to do or
omit to do anything which he would not do or omit, if
he was not so deceived. Besides, such act or omission
must cause or must be likely to cause damage or harm
to that person in body, mind, reputation or property.
Thus, deception is a necessary ingredient for the
offence of cheating under both parts of this section.
Besides, the complainant must allege/ prove that the
inducement had been caused by the deception
exercised by the accused. In other words, such
deception must produce the inducement to part with or
deliver property, which the complainant would not have
parted with or delivered, but for the inducement
resulting from such deception. The explanation to the
section clarifies that non-disclosure of relevant
information would also be treated as a
misrepresentation of facts leading to deception.
13. In order to constitute an offence of cheating the
intention to deceive should be in existence when the
SLP (Crl.) No. 10478/2023 Page 8 of 16
inducement was made. It is necessary to show that a
person had fraudulent or dishonest intention at the
time of making the promise. Mere failure to keep the
promise subsequently cannot be the sole basis to
presume that dishonest intention existed from the very
beginning.
14. In Vesa Holdings Private Limited and Another
7
v. State of Kerala and others , this court held that
every breach of contract would not give rise to an
offence of cheating. Only in those cases breach of
contract would amount to cheating where there was
any deception played at the very inception. If the
intention to cheat has developed later, the same cannot
amount to cheating. In other words, for the purpose of
constituting an offence of cheating, the complaint is
required to show that the accused had fraudulent or
dishonest intention at the time of making promise or
representation. Even in a case where allegations are
7
(2015) 8 SCC 293, paragraph 12
SLP (Crl.) No. 10478/2023 Page 9 of 16
made about failure on part of the accused to keep his
promise, in absence of a dishonest intention at the time
of making the initial promise, no offence under Section
420 of IPC is made out.
15. Whether non-fulfilment of promise/ commitment
by the accused is a reflection of his or her dishonest
intention at the time of making the promise is ordinarily
a matter of trial. However, in our view, where the
transaction between the parties is such that fulfilment
of the promise is not entirely in the control of the
promisor, or there is an inherent risk in fulfilment of
the promise, the High Court may, in exercise of its
inherent powers under the Code, or under Article 226 of
the Constitution, as the case may be, upon
consideration of the attending circumstances, take a
decision whether the dishonest intention existed or not
at the time of making the promise. And, if it comes to
the conclusion that the alleged conduct of the parties
does not reflect a dishonest intention of the accused
SLP (Crl.) No. 10478/2023 Page 10 of 16
from the very beginning, it may quash the criminal
complaint/ proceedings and relegate the aggrieved
party to civil remedies.
16. In the present case, what the High Court
overlooked is that money was advanced for movie
making and initially the agreement was to share the
profits. Importantly, when the first tranche of money
was transferred by the de-facto complainant to the
accused, the alleged promise was a share in profits.
Second tranche of money was transferred when the
project could not be completed for want of funds. It
also appears from paragraph 2 of the impugned order
that before the movie could be released, de facto
complainant took objection to its release. However,
when the appellant gave two post-dated cheques, the
movie could be released.
17. The aforesaid facts would indicate that the initial
payment of money by the de-facto complainant to the
appellant was for a movie project on promise of a share
SLP (Crl.) No. 10478/2023 Page 11 of 16
in profits. Additional money was paid later for its
completion under a promise of an enhanced share in
the profits. Thereafter, post-dated cheques were issued
to return the principal amount because of an objection
taken by the de facto complainant to the release of the
movie. Since there is no denial about the completion of
the movie and its ultimate release, what is clear is that
the promise to make a movie was not false. Therefore, it
cannot be said the appellant made a false promise that
he would make a movie with the aid of funds received
by him. Insofar as promise qua sharing of profits is
concerned, there are no allegations that the movie
earned profits. Therefore, from the allegations made in
the complaint it cannot be said that there was any
dishonest intention of the appellant in making the
promise which remained unfulfilled. 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. If one agrees to share
profits in lieu of his investment in a movie, he takes the
SLP (Crl.) No. 10478/2023 Page 12 of 16
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.
18. Insofar as dishonour of those two cheques are
concerned, it is clear that those were post-dated
cheques issued not as an inducement to obtain delivery
of money from the de facto complainant but to
discharge an existing obligation at a future date. Thus,
in essence, those cheques were not by way inducement
to lend money or invest money in the proposed movie.
Therefore, dishonour of those cheques, though may give
right to initiate proceeding under Section 138 of the
Negotiable Instruments Act, 1881, would not ipso facto
amount to an offence of cheating, inasmuch as for an
offence of cheating dishonest intention must exist from
the very beginning. Ordinarily, post-dated cheques are
SLP (Crl.) No. 10478/2023 Page 13 of 16
issued either by way of security to discharge an existing
or future liability or to discharge the liability at some
point of time in future. It is quite possible that at the
time of issuance of a post-dated cheque, the drawer
may have reason to believe that he would have
sufficient balance in his account by the date of the
cheque. Therefore, in our view, dishonour of a post-
dated cheque by itself is not sufficient to presume
existence of a dishonest intention on part of its drawer.
19. In the instant case, there is nothing to indicate
that the appellant 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. However, here there is no
allegation that movie was not made. Rather, it was
made and released. The prosecution case itself is to the
effect that further advance was taken to complete and
release the movie. However, when complainant took
SLP (Crl.) No. 10478/2023 Page 14 of 16
objection to its release, the appellant issued post-dated
cheques to repay the principal amount. Thus, those
cheques were to discharge an existing liability and not
by way of an inducement to take more money.
20. Assuming that by issuance of those cheques, the
de facto complainant was led to vacate his objection to
movie’s release, even then an offence of cheating would
not be made out for two reasons. First, those cheques
were post-dated therefore, did not carry a
representation of sufficient funds in the bank account
at the time of its issuance. Second, initial agreement, as
per the allegations, was to share profit on release of the
movie. Thus, in absence of allegations that movie made
profits, in our view, the complaint and the supporting
materials failed to indicate that the appellant harboured
a dishonest intention from inception. In conclusion, the
allegations only disclosed a civil cause of action and the
High Court fell in error in not quashing the criminal
proceedings.
SLP (Crl.) No. 10478/2023 Page 15 of 16
21. For the foregoing reasons, the appeal is allowed.
The impugned judgment and order of the High Court is
set aside to the extent it declined quashing of the
proceedings under Section 420 IPC. The impugned
criminal proceedings under Section 420 IPC are also
quashed. Pending applications if any stands disposed
of.
….………….......................................J.
(PAMIDIGHANTAM SRI NARASIMHA)
……………......................................J.
(MANOJ MISRA)
New Delhi;
March 19, 2026
SLP (Crl.) No. 10478/2023 Page 16 of 16
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NO. 1470 OF 2026
(Arising out of SLP Criminal No. 10478 of 2023)
V. GANESAN …APPELLANT
VERSUS
STATE REP BY THE SUB INSPECTOR
OF POLICE & ANR. …RESPONDENT(S)
J U D G M E N T
MANOJ MISRA, J.
1. Leave granted.
2. This appeal impugns the judgment and order of
1
the High Court at Madras dated 06.04.2023 in Crl.
O.P. No. 847 of 2021 and Crl. M.P. No. 518 of 2021,
whereby the prayer of the appellant to quash final
report and consequential proceedings in C.C. No.
Signature Not Verified
3569 of 2020 on the file of the Metropolitan
Digitally signed by
CHETAN ARORA
Date: 2026.03.19
15:55:10 IST
Reason:
1
The High Court
SLP (Crl.) No. 10478/2023 Page 1 of 16
Magistrate (CCB and CBCID, Metro Cases), Egmore,
Chennai-600008, under Section 406 and 420 of the
2
Indian Penal Code, 1860 , was partly allowed to the
extent of indictment under Section 406 IPC; however,
the prayer to quash indictment under Section 420
IPC was declined.
3. In brief, the prosecution case, as could be evinced
from the final report (i.e., police report) submitted
under Section 173 of the Code of Criminal Procedure,
3
1973 , is that the accused (the appellant herein) was
producing a ‘movie’. In the course of its production,
he ran short of funds. He, therefore, requested the
de-facto complainant (i.e., the second-respondent
herein) 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 promise of an
additional 17% share in profits. Ultimately, two post-
dated cheques of Rs.24 lacs each were issued by the
2
IPC
3
CrPC
SLP (Crl.) No. 10478/2023 Page 2 of 16
accused to the de facto complainant towards return
of the principal amount which returned unpaid for
insufficient funds in the account. Based on above, it
was alleged that the accused had cheated the
complainant and had also committed offence of
criminal breach of trust.
4. Aggrieved by the police report and the
consequential proceedings, the appellant invoked the
jurisdiction of the High Court under Section 482 of
CrPC, inter alia, to quash the report and the
consequential proceedings on the ground that a pure
civil cause of action was given colour of a criminal
offence.
5. By the impugned order, the High Court quashed
the indictment of an offence punishable under
Section 406 IPC but declined to quash the
proceedings qua the offence of cheating punishable
under Section 420 IPC.
SLP (Crl.) No. 10478/2023 Page 3 of 16
6. We have heard the learned counsel for the parties.
7. On behalf of the appellant it is submitted that
admittedly the second-respondent had invested
money in a movie project on expectation of good
returns. There is no dispute that the movie project
was completed. However, it could not generate
profits. In such circumstances, the appellant could
not fulfil its commitment of providing good returns on
the investment. Therefore, there was no dishonest
intention and the dispute between the parties is
purely civil in nature. Hence, institution and
continuation of criminal proceedings is nothing but
abuse of the process of Law.
8. Per contra , on behalf of the respondent(s) it is
submitted that dishonest intention of the appellant
was there from the very beginning which is evident
from the fact that the two cheques got dishonoured
for want of funds. Besides, on appellant’s false
SLP (Crl.) No. 10478/2023 Page 4 of 16
assurance of profits, money was lent. In these
circumstances, offence of cheating is made out.
9. We have accorded due consideration to the rival
submissions and have perused the record.
10. The police report indicted the appellant for
offences of criminal breach of trust and cheating
punishable under Sections 406 and 420 IPC
respectively. The High Court came to the conclusion,
and rightly so, that no offence punishable under
Section 406 of IPC is made out as there was no
entrustment. Regarding the offence of cheating, the
High Court concluded that prima facie it is made out.
The reasoning of the High Court in support of its
conclusions can be found in paragraph 6 of its
judgment, which is extracted below:
“This Court on perusal of the impugned final
report finds that the offence under Section 406
IPC is not made out. There is no entrustment
made to the petitioner, in order to attract the
offence of criminal breach of trust. However, this
Court finds that there was an Agreement
between the petitioner and the de-facto
complainant on 30.12.2013. The Agreement
SLP (Crl.) No. 10478/2023 Page 5 of 16
shows that the petitioner promised 30% interest
on the initial invested amount on Rs.
19,60,000/-. Thereafter, the de-facto
complainant paid Rs. 27,00,000/- on
03.04.2014; and the petitioner had promised
47% profit on the invested amount. The
petitioner had not made any payment to the de-
facto complainant/second-respondent as
promised. While so, the de-facto
complainant/second-respondent objected to the
petitioner releasing the movie. The petitioner had
given one more undertaking letter, wherein, he
had promised to pay the principal sum in two
instalments, profit on a subsequent date; and
that if the project did not yield any profit, he
would pay an interest on the said sum of Rs.
48,00,000/-. All the above facts, disclose that at
every stage, the representation has been made to
the de-facto complainant to induce him to part
with money. The allegations prima facie disclose
the offence under Section 420 IPC. In the facts of
the instant case, the question whether it was
only a breach of promise or cheating has to be
adjudicated only during trial. Therefore, this
Court is not inclined to quash the impugned
final report in so far as the offence under Section
420 IPC. Hence, the impugned final report is
quashed only in respect of offence under Section
406 IPC. However, the learned Metropolitan
Magistrate may try the case on the basis of
evidence adduced before him without being
influenced by any of the observations made in
this order. The learned Metropolitan Magistrate
(CCB and CBCID, Metro Cases), Egmore,
Chennai – 600 008 may conduct the trial as
4
expeditiously as possible ” .
11. The above extract makes it clear that the High Court
was of the view that as the money was advanced on a
promise of good returns and, subsequently, an
4
Extracted from typed copy of the judgment placed on record. May contain typographical mistakes.
SLP (Crl.) No. 10478/2023 Page 6 of 16
undertaking was also given to return the principal
amount if the project did not yield any profit, it could be
taken that the complainant parted with his money on
the inducement of the appellant and therefore, prima
facie , an offence punishable under Section 420 IPC is
made out.
5
12. In Iridium India Telecom Ltd. v. Motorola Inc. ,
this Court laid down the ingredients of an offence of
6
cheating as defined in Section 415 of IPC. It was
observed that Section 415 of IPC has two parts. The
first part makes it necessary that the deception by the
accused of the person deceived, must be fraudulent or
dishonest. Such deception must induce the person to
either: (a) deliver property to any person; or (b) consent
that any person shall retain any property. The second
part also requires that the accused must by deception
5
(2011) 1 SCC 74, paragraph 68
6
Section 415. Cheating. -- Whoever, by deceiving any person, fraudulently or dishonestly induces the
person so deceived to deliver any property to any person, or to consent that any person shall retain any
property, or intentionally induces the person so deceived to do or omit to do anything which he would
not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage
or harm to that person in body, mind, reputation or property, is said to ‘cheat’.
Explanation. --- A dishonest concealment of facts is a deception within the meaning of this section.
SLP (Crl.) No. 10478/2023 Page 7 of 16
intentionally induce the person deceived either to do or
omit to do anything which he would not do or omit, if
he was not so deceived. Besides, such act or omission
must cause or must be likely to cause damage or harm
to that person in body, mind, reputation or property.
Thus, deception is a necessary ingredient for the
offence of cheating under both parts of this section.
Besides, the complainant must allege/ prove that the
inducement had been caused by the deception
exercised by the accused. In other words, such
deception must produce the inducement to part with or
deliver property, which the complainant would not have
parted with or delivered, but for the inducement
resulting from such deception. The explanation to the
section clarifies that non-disclosure of relevant
information would also be treated as a
misrepresentation of facts leading to deception.
13. In order to constitute an offence of cheating the
intention to deceive should be in existence when the
SLP (Crl.) No. 10478/2023 Page 8 of 16
inducement was made. It is necessary to show that a
person had fraudulent or dishonest intention at the
time of making the promise. Mere failure to keep the
promise subsequently cannot be the sole basis to
presume that dishonest intention existed from the very
beginning.
14. In Vesa Holdings Private Limited and Another
7
v. State of Kerala and others , this court held that
every breach of contract would not give rise to an
offence of cheating. Only in those cases breach of
contract would amount to cheating where there was
any deception played at the very inception. If the
intention to cheat has developed later, the same cannot
amount to cheating. In other words, for the purpose of
constituting an offence of cheating, the complaint is
required to show that the accused had fraudulent or
dishonest intention at the time of making promise or
representation. Even in a case where allegations are
7
(2015) 8 SCC 293, paragraph 12
SLP (Crl.) No. 10478/2023 Page 9 of 16
made about failure on part of the accused to keep his
promise, in absence of a dishonest intention at the time
of making the initial promise, no offence under Section
420 of IPC is made out.
15. Whether non-fulfilment of promise/ commitment
by the accused is a reflection of his or her dishonest
intention at the time of making the promise is ordinarily
a matter of trial. However, in our view, where the
transaction between the parties is such that fulfilment
of the promise is not entirely in the control of the
promisor, or there is an inherent risk in fulfilment of
the promise, the High Court may, in exercise of its
inherent powers under the Code, or under Article 226 of
the Constitution, as the case may be, upon
consideration of the attending circumstances, take a
decision whether the dishonest intention existed or not
at the time of making the promise. And, if it comes to
the conclusion that the alleged conduct of the parties
does not reflect a dishonest intention of the accused
SLP (Crl.) No. 10478/2023 Page 10 of 16
from the very beginning, it may quash the criminal
complaint/ proceedings and relegate the aggrieved
party to civil remedies.
16. In the present case, what the High Court
overlooked is that money was advanced for movie
making and initially the agreement was to share the
profits. Importantly, when the first tranche of money
was transferred by the de-facto complainant to the
accused, the alleged promise was a share in profits.
Second tranche of money was transferred when the
project could not be completed for want of funds. It
also appears from paragraph 2 of the impugned order
that before the movie could be released, de facto
complainant took objection to its release. However,
when the appellant gave two post-dated cheques, the
movie could be released.
17. The aforesaid facts would indicate that the initial
payment of money by the de-facto complainant to the
appellant was for a movie project on promise of a share
SLP (Crl.) No. 10478/2023 Page 11 of 16
in profits. Additional money was paid later for its
completion under a promise of an enhanced share in
the profits. Thereafter, post-dated cheques were issued
to return the principal amount because of an objection
taken by the de facto complainant to the release of the
movie. Since there is no denial about the completion of
the movie and its ultimate release, what is clear is that
the promise to make a movie was not false. Therefore, it
cannot be said the appellant made a false promise that
he would make a movie with the aid of funds received
by him. Insofar as promise qua sharing of profits is
concerned, there are no allegations that the movie
earned profits. Therefore, from the allegations made in
the complaint it cannot be said that there was any
dishonest intention of the appellant in making the
promise which remained unfulfilled. 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. If one agrees to share
profits in lieu of his investment in a movie, he takes the
SLP (Crl.) No. 10478/2023 Page 12 of 16
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.
18. Insofar as dishonour of those two cheques are
concerned, it is clear that those were post-dated
cheques issued not as an inducement to obtain delivery
of money from the de facto complainant but to
discharge an existing obligation at a future date. Thus,
in essence, those cheques were not by way inducement
to lend money or invest money in the proposed movie.
Therefore, dishonour of those cheques, though may give
right to initiate proceeding under Section 138 of the
Negotiable Instruments Act, 1881, would not ipso facto
amount to an offence of cheating, inasmuch as for an
offence of cheating dishonest intention must exist from
the very beginning. Ordinarily, post-dated cheques are
SLP (Crl.) No. 10478/2023 Page 13 of 16
issued either by way of security to discharge an existing
or future liability or to discharge the liability at some
point of time in future. It is quite possible that at the
time of issuance of a post-dated cheque, the drawer
may have reason to believe that he would have
sufficient balance in his account by the date of the
cheque. Therefore, in our view, dishonour of a post-
dated cheque by itself is not sufficient to presume
existence of a dishonest intention on part of its drawer.
19. In the instant case, there is nothing to indicate
that the appellant 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. However, here there is no
allegation that movie was not made. Rather, it was
made and released. The prosecution case itself is to the
effect that further advance was taken to complete and
release the movie. However, when complainant took
SLP (Crl.) No. 10478/2023 Page 14 of 16
objection to its release, the appellant issued post-dated
cheques to repay the principal amount. Thus, those
cheques were to discharge an existing liability and not
by way of an inducement to take more money.
20. Assuming that by issuance of those cheques, the
de facto complainant was led to vacate his objection to
movie’s release, even then an offence of cheating would
not be made out for two reasons. First, those cheques
were post-dated therefore, did not carry a
representation of sufficient funds in the bank account
at the time of its issuance. Second, initial agreement, as
per the allegations, was to share profit on release of the
movie. Thus, in absence of allegations that movie made
profits, in our view, the complaint and the supporting
materials failed to indicate that the appellant harboured
a dishonest intention from inception. In conclusion, the
allegations only disclosed a civil cause of action and the
High Court fell in error in not quashing the criminal
proceedings.
SLP (Crl.) No. 10478/2023 Page 15 of 16
21. For the foregoing reasons, the appeal is allowed.
The impugned judgment and order of the High Court is
set aside to the extent it declined quashing of the
proceedings under Section 420 IPC. The impugned
criminal proceedings under Section 420 IPC are also
quashed. Pending applications if any stands disposed
of.
….………….......................................J.
(PAMIDIGHANTAM SRI NARASIMHA)
……………......................................J.
(MANOJ MISRA)
New Delhi;
March 19, 2026
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