Kenyan Energy Firm Challenges Property Auction in Complex Islamic Banking Disput
A Nairobi-based energy company and its director have filed an urgent application before the Environment and Land Court to halt their eviction from multiple properties, alleging the seizure stems from unlawful auctions conducted by Premier Bank Limited in violation of Islamic finance principles.
The applicants, Mahadi Energy Limited and its Managing Director Ibrahim Hussein Mahadi, are seeking to set aside court orders that granted possession of the properties to Shabeel Project Services Limited, the company that purchased them at auction. The case was filed through the law firm Danstan Omari & Associates.
Shabeel Project Services Limited, the respondent in the matter, is represented by the law firm Omusolo Mungai & Co. Advocates. The dispute originates from financial facilities extended by Premier Bank Limited (formerly First Community Bank Limited), which is named as a central party in a related constitutional petition but is not a direct respondent in this specific application.
In a sworn affidavit, Ibrahim Hussein Mahadi detailed a protracted dispute over facilities totaling 631 million shillings ($4.9 million), advanced between 2011 and 2017 under Islamic financing structures, including Murabaha (cost-plus financing) and Musharakah (joint venture).
Mahadi claims his company repaid approximately 530 million shillings through various means, including payments from associated company Mvita Container Depot Limited and rental income from APM Terminals Kenya Ltd paid directly to the bank. Despite this, he states Premier Bank claims an outstanding debt of 950 million shillings ($7.4 million) and proceeded to auction the properties on August 14 and September 4, 2024.
The core legal argument, advanced by advocate Danstan Omari, is that the bank failed to justify its profits in a manner compliant with Sharia law, which prohibits interest (Riba). The filing points to a parallel constitutional petition, Mombasa High Court Constitutional Petition No. E066 of 2024, which challenges the regulatory framework for Islamic banking in Kenya.
The current application alleges that Shabeel Project Services obtained the eviction orders from the Nairobi court on October 23, 2025, without disclosing that the Mombasa High Court had already issued conservatory orders. Justices Olga Sewe and Gregory Mutai had previously issued orders in Mombasa restraining any interference with the properties.
“This Court has perhaps unknowingly accepted an illegal invitation by the Applicant/Respondent to engage in litigation that potentially embarrasses this Court,” states the Certificate of Urgency filed by Danstan Omari & Associates, accusing Shabeel of “forum shopping.”
The law firm Omusolo Mungai & Co., representing Shabeel, has not yet publicly responded to the allegations.
The properties in question are substantial commercial assets, including Land Reference Number 209/5082 on Mtelo Road, South C; LR Number 209/2389/95 on Juja Road, Pangani; and two subdivisions in Mombasa’s Mainland North section.
Mahadi Energy argues that these properties are integral to its operations in petroleum importation and distribution, and that their loss would cause “irreparable harm” and “business collapse.”
The Court is expected to rule shortly on whether to certify the application as urgent and grant a temporary stay of the eviction orders pending a full hearing.
