(2) The Magistrate shall record and consider any cause which such complainant or informant may show, and if he is satisfied that there was no reasonable ground for making the accusation, may, for reasons to be recorded, make an order that compensation to such amount, not exceeding the amount of fine he is empowered to impose, as he may determine, be paid by such complainant or informant to the accused or to each or any of them.
(3) The Magistrate may, by the order directing payment of the compensation under sub-section (2), further order that, in default of payment, the person ordered to pay such compensation shall undergo simple imprisonment for a period not exceeding thirty days.
(4) When any person is imprisoned under sub-section (3), the provisions of Sections 68 and 69 of the Indian Penal Code, 1860 shall, so far as may be, apply.
(5) No person who has been directed to pay compensation under this Section shall, by reason of such order be exempted from any civil or criminal liability in respect of the complaint made or information given by him.
However, any amount paid to an accused person under this Section shall be taken into account in awarding compensation to such person in any subsequent civil suit relating to the same matter.
(6) A complainant or informant who has been ordered under sub-section (2) by a Magistrate of the second class to pay compensation exceeding one hundred rupees, may appeal from the order, as if such complainant or informant had been convicted on a trial held by such Magistrate.
(7) When an order for payment of compensation to an accused person is made in a case which is subject to appeal under sub-section (6), the compensation shall not be paid to him before the period allowed for the presentation of the appeal has elapsed, or, if an appeal is presented, before the appeal has been decided; and where such order is made in a case which is not so subject to appeal, the compensation shall not be paid before the expiration of one month from the date of the order.
(8) The provisions of Section 250 of the Code apply to summons-cases as well as to warrant-cases.
According to Section 250(8) of the Code of Criminal Procedure, as the provisions of Section 250 of the Code apply to summons-cases as well as to warrant-cases, the Magistrate may call upon the person making such accusation to show cause why he should not pay compensation to the accused person, if he, while discharging or acquitting the accused, thinks that there was no reasonable ground for making the accusation against the accused person.
After hearing such person, the Magistrate may, for reasons to be recorded, make an order fixing the compensation to be paid by such person to the accused person. The Magistrate may further order that in default of payment, the complainant shall undergo simple imprisonment for a period not exceeding thirty days.