A taxi driver who has served an 18-month jail sentence for a gay sex attack at knifepoint had his conviction quashed by appeal court judges yesterday.

Hasham Shah, 39, from Manchester, served his full sentence after the jury found him guilty of false imprisonment and the indecent assault of a student he was driving home.

His accuser, who was not named, eventually admitted to the police that he had made up the story and in April was jailed for 15 months for perverting the course of justice.

Mr Justice Scott Baker, sitting with Mr Justice Gibbs and Judge Tom Crowther in the appeal court in London, said Mr Shah had picked up his accuser from the Gay Village in Manchester city centre in April 2000. His passenger complained to the police that Mr Shah had locked him in the cab and forced him at knife point to perform indecent acts.

Mr Shah maintained it was his accuser who had forced himself upon him. The jury at Manchester crown court did not believe him and he was convicted in January 2001.

It was not until November last year that his accuser finally confessed that he had lied.

"In those circumstances," Mr Justice Scott Baker said, "It is obvious to us that Mr Shah's conviction cannot be sustained." He added that Mr Shah had made it clear that he was not gay.

A letter was read to the court in which Mr Shah told how the case had affected him and his wife. "What everyone is forgetting is that the small amount of sexual activity which took place was because he assaulted me, and I was scared because I could not get out of the cab.

"Only two people were in the cab that awful night, and I was having a nightmare - not fun. If people had done their jobs right... my life and that of my wife would not be ruined.

"He should be registered as a danger to the public. There are so many things left unsaid."

Mr Justice Scott Baker quashed the conviction and ruled that there should be no retrial. He concluded: "This court has very considerable sympathy with the applicant."

Outside the court, Mr Shah's counsel Christopher Diamond said his client had lost his job as a licensed black cab driver as a result of the false allegation.