The retrial of the ousted Egyptian dictator Hosni Mubarak collapsed just minutes after it started on Saturday as the judge used his opening statements to recuse himself from proceedings and referred the case to another court.

Mubarak was sentenced to life imprisonment last June on charges of corruption and complicity in the murder of protesters during the 2011 uprising. But he was granted a retrial in January after a Cairo court agreed the prosecution's original case was poorly prepared.

Now the process has been postponed further after the judge, Mustafa Hassan Abdullah, resigned on the grounds that any judgment he made would be viewed suspiciously because of his previous involvement in trials of Mubarak-era officials. The decision sparked pandemonium in the court, as lawyers and relatives of people killed during the 2011 uprising began shouting.

The court session was Mubarak's first public outing in nearly a year – and he appeared in much better health than in his last. He arrived in court wearing sunglasses, smiled and waved at onlookers, and seemed relaxed – perhaps hopeful that Saturday's proceedings would secure his release. Instead, he will return to jail while the practicalities of his next court hearing are decided.

Abdullah previously adjudicated in the controversial prosecution of 24 officials accused of co-ordinating the battle of the camel, a clash between revolutionaries and the regime in 2011. Abdullah acquitted them all, prompting concerns that he was a Mubarak sympathiser.

Outside the court, where dozens of revolutionaries and Mubarak supporters had gathered, prosecution lawyers welcomed Abdullah's resignation. "We were going to ask for this anyway," said Kadry Farid, a senior member of the prosecution. "It was a fatal decision to assign him to this case." Farid added that Abdullah had not allowed the prosecution to submit crucial new evidence – a decision he hoped would be reversed by a new judge.

But the news infuriated the 50 pro-Mubarak demonstrators who had assembled with banners, drums and photographs of their jailed idol to protest against his continued incarceration.

"They put pressure on him because he is a fair judge. They don't want him to let Mubarak out," claimed Aryat Osman, holding a photograph of the former dictator. "Mubarak is the solution," chanted the crowd, some of whom also briefly scuffled with the supporters of people killed during the 2011 uprising.

Pro-revolution supporters, who were separated from the Mubarak crowd by riot police, also expressed disappointment with the wider legal process. For the families of victims, Abdullah's resignation was small comfort given that Mubarak may still be acquitted in a future trial. "Mubarak should have been in jail a long time ago," said Ali Abu Sariar, who symbolically held up a hangman's noose. "Why should we follow these procedures? After the revolution in France, a symbol of democracy, they executed a lot of people."

Revolutionaries are also frustrated about the failure of the prosecution to mount a convincing case against Mubarak. When Mubarak was granted a retrial in January, opposition activists hoped it would allow the evidence compiled in a newly completed presidential report about Mubarak-era abuses to augment the prosecution's case.

But Farid admitted that his prosecution team had not had time to look into the report's findings. When parts of the report were leaked to the Guardian this week, its findings were even criticised by the president, Mohamed Morsi, himself, which suggests that there is little political will within any part of the Egyptian state to take its conclusions seriously.

Mubarak remains in custody for now – and were he to be released in subsequent proceedings, most Egyptians are likely to respond furiously. But for the time being, his retrial has not stirred the same heightened level of emotion as his conviction.

"Last year, everyone was waiting," said Professor Khaled Fahmy, head of history at the American University in Cairo and a prominent Egyptian columnist. "It set a precedent, and it was a very, very significant move in Egyptian history. Now, we have already seen him behind bars. It's not that he's been forgotten, but it has become less of an issue."