The REAL solution to this is to change the End-of-Line (EOL) characters to Unix format, instead of MsDos. So I guess this error will only occur if you worked in Windows.
Anyway, teh mighty
SOLUTION:
(1) Open app/Console/cake file using any text editor that allows changing of EOL characters e.g. NotePad++.
(2) In NotePad++ click:
Edit -> EOL Conversion -> Convert to Unix format
(3) Save the file and upload it to the server. Now if you navigate to the CakePHP app directory using command like:
cd /usr/share/nginx/html/cakeproject/app
...you should be able to run Console/cake
without any problems and see standard output (basically help commands).
Hope this helped you!