New Delhi: In a significant ruling for the film industry, the Supreme Court has held that a movie's failure to generate profits cannot be treated as a criminal offence.

The bench of Justices Pamidighantam Sri Narasimha and Manoj Misra quashed cheating charges against producer V Ganesan, stressing that investments in films are inherently subject to commercial risk.

The case stemmed from a dispute with an investor who had contributed Rs 48 lakh between 2013 and 2014, in return for a profit share that was later increased to 47%. When the film failed at the box office, Ganesan issued two post-dated cheques to repay the amount, both of which bounced. The investor then initiated criminal proceedings under Section 420 of the IPC.

The apex court clarified that dishonour of cheques or failure to deliver profits does not automatically prove dishonest intent. "In such commercial transactions, failure to generate profit or repay the amount cannot, by itself, be construed as an act of cheating," the bench observed.

Calling the dispute "purely civil in nature," the court cautioned against the misuse of criminal law to settle business disagreements, underlining that cheating requires proof of fraudulent intent at the very outset.