Oil firm moves to court to stop eviction, citing fraudulent auction and conflicting court orders
The firm argues that the ex parte orders were obtained by Shabeel Project Services Limited through concealment of key facts, including the existence of an active constitutional petition in Mombasa and valid conservatory orders protecting the same properties.
Energy company Mahadi Energy Limited has moved to the High Court in Nairobi seeking to stop its eviction from several prime properties, claiming the auction that led to their sale was fraudulent and conducted in violation of Islamic finance principles.
In a certificate of urgency filed through lawyer Danstan Omari, the company and its managing director, Ibrahim Hussein Mahadi, are asking the court to suspend orders issued on October 23, 2025, that barred them from interfering with Shabeel Project Services Limited's occupation of properties in South C, Pangani, and Mombasa Mainland North.
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The firm argues that the ex parte orders were obtained by Shabeel Project Services Limited through concealment of key facts, including the existence of an active constitutional petition in Mombasa and valid conservatory orders protecting the same properties.
In court papers, Mahadi says the contested auction arose from loan facilities advanced by Premier Bank Limited (formerly First Community Bank) between 2011 and 2017, amounting to Sh631 million. The loans were issued under Islamic financing structures such as Murabaha and Musharakah, which prohibit interest (Riba).
However, Mahadi claims the bank imposed unjustified "profits" that were not Sharia-compliant, rendering the debt unlawful.
Mahadi further alleges that several of the properties sold in auctions on August 14 and September 4, 2024, were never used as securities for the bank loans, making their inclusion in the sale "illegal and fraudulent."
He disclosed that the company has already challenged the legality of the transactions in the Mombasa High Court Constitutional Petition No. E066 of 2024 (Mahadi Energy Limited & Another v Premier Bank Limited & Others), where Justice Gregory Mutai and Justice Olga Sewe had previously issued conservatory orders halting any interference with the properties.
Mahadi accuses Shabeel of forum shopping and misleading the Nairobi court into issuing orders that conflict with the existing Mombasa rulings. He maintains that Mahadi Energy has repaid over Sh530 million, and the balance claimed by the bank is inflated.
The company now seeks to have the eviction orders lifted, arguing that the properties are vital to its petroleum business and that justice requires maintaining the status quo pending the determination of the Mombasa petition.
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