The Appellant employed the Respondent at his School as an Accountant/Cashier. There was a loss of about Tshs. 75,000,000/-. As a result, the Respondent brought the Auditor to inspect the alleged loss. Then, the matter was reported to the police. The Respondent was arrested and charged with the offence of stealing in the District Court of Arusha. After a full trial, the Respondent was found not guilty and subsequently acquitted on 29/4/2014. The Respondent instituted the suit claiming compensation for defamation and malicious prosecution in the Resident Magistrates’ Court of Arusha. The Court granted Tshs. 10,500,000/- in favour of the Appellant being Tshs. 5,000,000/- for both general damages and the same sum for special damages. In addition, there was awarded Tshs. 500,000/- for disturbance. Aggrieved by the decision of the Resident Magistrates’ Court the Appellant appealed to this Court.