law: Code of Criminal Procedure Act, 1973
  
  250.Compensation for accusation without reasonable cause.-
  (1) If, in any case instituted upon complaint
  
  or upon information given to a police officer or to a Magistrate, one or more
  
  persons is or are accused before a Magistrate of any offence triable by a
  
  Magistrate, and the Magistrate by whom the case is heard discharges or acquits
  
  all or any of the accused, and is of opinion that there was no reasonable
  
  ground for making the accusation against them or any of them, the Magistrate
  
  may, by his order of discharge or acquittal, if the person upon whose complaint
  
  or information the accusation was made is present, call upon him forthwith to
  
  show cause why he should not pay compensation to such accused or to each or any
  
  of such accused when there are more than one; or, if such person is not
  
  present, direct the issue of a summons to him to appear and show cause as
  
  aforesaid.
  (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 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:
  Providedthat 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 this section apply to summons-cases as well as to
  
  warrant-cases.