Upon such cause being shown the Magistrate shall record and consider it and if satisfied that there was no reasonable ground for making the accusation, he may for reasons to be recorded, direct 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. The Magistrate may, in the same order, direct that in default of payment the person ordered to pay such compensation shall suffer simple imprisonment for a period not exceeding thirty days. The order regarding the payment of compensation shall not exempt the complainant or informant from any civil or criminal liability in respect of the complaint made in information given by him. But the amount of compensation awarded shall be taken into account in compensation to such person in subsequent civil suit relating to the same matter. [Section 250 (1-5)] A complainant or informant who has been ordered 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.

[Section 250 (6)] 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. [Section 250 (7)] The provisions of Section 250 apply to summons cases as well as to warrant cases. [Section 250 (8)]

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Regarding for an order of compensation:

The following conditions must be fulfilled for the passing of an order of compensation:— (i) The case must have been instituted either upon complaint or upon information given to a police officer or to a Magistrate; (ii) the person against whom the complaint is filed or information is given must be accused of an offence; (iii) the offence must have been triable by a Magistrate; (iv) the Magistrate discharges or acquits the accused; and (v) there was no reasonable ground for making the accusation against them.