Petroleum Firm Fights to Save Multi-Billion Shilling Properties from Auction

A Petroleum dealer has filed a petition in court in a bid to salvage the disposal of its prime properties worth billions of shillings over a disputed loan of Sh631.5 million from the lender.

Mahadi Energy Limited (MEL) through its lawyers Danstan Omari and Stanley Kinyanjui has urged the Milimani High Court to intervene to salvage one of the largest container depots after the Kilindini Port storage facilities in East and Central Africa from being sold through an auction to a private Shabeel Project Services Limited (SPSL).

Mahadi has disclosed in its case, certified as urgent by a judge at the Environment and Lands Court (ELC) in Nairobi, that an order permitting the auction was obtained through misrepresentation of facts.

Lawyers for MEL told the ELC Judge that SPSL failed to disclose that a Mombasa Court had issued an order prohibiting interference with its parcel of land.

MEL states that, unless the court intervenes, the property situated at Mombasa Mainland, amongst others, will fall at the hammer of auctioneers and suffer irreparable damage.

The court heard that two conflicting orders were issued by Judges sitting at the Nairobi and Mombasa High Courts.

The Mombasa court stopped the sale or interference, while the Nairobi court permitted the sale.

“SPSL purporting to be the purchaser from the invalid auction, subsequently moved this Honorable Court and obtained ex-parte (single party) orders on October 23, 2025 restraining the respondent/applicants (mahadi) from interfering with their possession of the suit property,” discloses Mahadi in the court papers.

The ELC judge heard that the orders granted in favor of SPSL were allegedly procured without full and frank disclosure to the court about the pending case between MEL and the lender.

Further, the ELC Judge was told on October 27, 2025,  that the judge who allowed SPSL to move into the Mombasa land was not informed of the validly existing conservatory orders prohibiting any interference with the land.

The decision amounts to material non-disclosure, suppression of facts, and an abuse of the court process, the judge heard.

Lawyers for MEL stated that a Judge at the Mombasa High Court had suspended the sale of the parcels of land used by the lender to guarantee the loans.

But a judge sitting in Nairobi, unaware of the existence of Mombasa High Court orders, allowed the bank to proceed with the realization of its loan, resulting in auctioneers disposing of the parcels of land used to secure the loan facilities.

Praying for an order to stay (suspend) the auction of the properties in Nairobi and Mombasa Cities, the High Court was informed that dishonesty surrounds the sale of the securities, as a proprietor of Mahadi Energy Limited has repaid the Sh631.5 million.

In evidence presented to the court by MEL lawyers, it has come to light that one Ibrahim Hussein Mahadi, the managing director of Mahadi Energy Limited (MEL), settled the outstanding loan.

In a surprise revelation to the court, Mahadi has disclosed that all the payments he personally remitted to PBL were not reflected in its statement of accounts as offsets to the outstanding loan.

Mahadi says the loan was secured from PBL to expand its businesses between 2011 and 2017.

“Premier Bank Limited–PBL-( an Islamic banking institution formerly known as First Community Bank Limited) advanced loan facilities totaling Sh631,558,748,” states Mahadi in an affidavit to support the case.

He adds:” These facilities were structured under Islamic Finances principles ostensibly following Sharia Law conce such as Murabaha ( cost plus financing)  and Musharakah (joint venture) which prohibit interest (Riba) and emphasizes risk sharing, profit justification and ethical dealings.”

The court has been informed that the loans were secured through various legal charges created over the applicants’ (Shabeel and Mahadi) properties.

Mahadi states under oath that he and his company have repaid the loan in excess of Sh530 Million.

Mahadi has explained to the court that on September 10, 2013, he paid Sh99,669,221.90 through Chase Bank.

Through his other company, Mvita Container Depot Limited, he (Mahadi) paid Sh275 Million over a period of four (4) years and seven (7) months.

APM Terminals Kenya Limited paid Sh75 million.

Mahadi further states that Sh40 million was paid directly by the National Lands Commission (NLC), as compensation to him.

However, these payments were not reflected in the lender’s bank statements.

Mahadi claims PBL is an Islamic model; it is bound by Sharia principles, which prohibit Riba (usury or unjustified interest) and require that “profits” be transparently justified based on actual costs, risks shared, and value added, without exploitation.

“Despite repeated demands, the bank in question –PBL- failed to provide a clear Sharia compliant breakdown of the alleged profits or outstanding amounts thus rendering the debt unlawful and unenforceable under Islamic law finance norms and Kenyan laws,” states Mahadi.

Pending determination of the MEL case, the court has been urged to restrain the bank from auctioning land parcels in South C,  Juja Road, Pangani, Mombasa Mainland North (two parcels of land).

The judge directed MEL lawyer Danstan Omari to serve the court papers on SPSL within seven (7) days from October 27, 2025, and fixed the case for further mention on December 8, 2025.