The High Court in Meru has stopped the implementation of a report on miraa (khat) revival compiled by a team appointed by President Uhuru Kenyatta.
The court also stopped any further release or use of the Sh1 billion set aside by the government until the case filed by miraa traders is heard.
Meru High Court judge Alfred Mabeya ruled the task force was appointed without involving the stakeholders.
He added that the task force, which was later changed to an implementation committee, carried out its research in an opaque manner and handed over the report without publishing its contents to Kenyans.
"It made the recommendations which are unknown to the public and now the very people are about to be given Sh1.2 billion to disburse. That won't do," said Justice Mabeya.
In the ruling, the court observed that the opaqueness of committee was against Article 201 of the Constitution.
He said public finances should be used in transparent and accountable manner as set by supreme law.
"I'm satisfied that if the sum of Sh1.2 billion is released to the unknown Saccos there will be nothing to rule on once the petition is fully heard and determined," ruled Justice Mabeya.
He said in the matter was of public interest and the money should be reserved, pending the hearing and determination of the main petition.
Three traders, suing on behalf of Nyambene Miraa Traders Association, moved to court to stop the recommendations to President Kenyatta, who has since directed the government to release Sh1.2 billion to implement them.
Lawyers Laichena Mugambi for the petitioners and Frank Walukwe for the county government told the court the money may be spent since President Kenyatta gazetted the names of the task force.
"We're seeking from the court to restrain the government from releasing the money because if it's released the suit before this court will be rendered useless,'' argued Waukwe.
They asked the court to issue conservatory orders to stop the task force through undisclosed and unidentified sacco.
The case filed under certificate of urgency.
The petitioners, Kimathi Munjuri, Jacob Miriti, and Naftaly Kathurima argue that Mr Kenyatta transformed the taskforce into an implementation committee without consultation with stakeholders and the Meru County government.
They further argue that release of the money as ordered by the President may not serve the best interest of miraa farmers, traders and residents of khat growing areas.
Those listed as respondents include Head of Public Service and Chief of Staff Joseph Kinyua, Cabinet secretaries for finance and agriculture and the Attorney-General.