Section 237 of the Code of Criminal Procedure provides that if a Court of Session takes cognizance of an offence under S. 199(2), it must try the case in accordance with the procedure for the trial of warrant-cases instituted before a Magistrate’s Court otherwise than on a Police Report. Unless the Court of Session directs otherwise, the person against whom the offence is alleged to have been committed must be examined as a witness for the prosecution. Moreover, every such trial should be held in camera, if either party so desires, or if the Court thinks fit to do so.
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If, in any such case, the Court discharges or acquits all or any of the accused, and it is of the opinion that there was no reasonable cause for making the accusation against him or them, it may also direct the person against whom the offence was alleged to have been committed to show cause why he should not pay compensation to the accused. However, the President and Vice-President of India, the Governor of a State or an Administrator-General of a Union Territory cannot be served with such a show-cause notice.
When cause is shown by such a person, the Court must record and consider the same, and if it is satisfied that there was no reasonable cause for making the accusation, it may pass an order that compensation, not exceeding rupees one thousand, be paid to the accused, or to each of the accused, if there are more than one. Any compensation awarded as above can be recovered as if it is a fine imposed by a Magistrate.
Moreover, the person paying such compensation is not to be exempted from any further civil or criminal liability in respect of that complaint, only by reason of the order directing compensation to be paid. However, any amount thus paid to the accused is to be taken into account whilst awarding compensation to such a person in any subsequent civil suit relating to the same matter. It is also open to the person who has been ordered to pay compensation to appeal against such order (for payment of compensation) to the High Court.