The high-profile legal dispute between India's billionaire Ambani brothers was disrupted on Wednesday when a judge withdrew from a Supreme Court hearing, citing potential conflict of interest.

In an order, the Supreme Court said Justice RV Raveendran had recused himself and the Chief Justice would constitute a new bench. Raveendran, part of the three-member bench, said he would stand down as his daughter worked at a firm, AZB & Partners, which was a consultant to Reliance Industries (RIL).

Raveendran said he came to know about his daughter's association with AZB & Partners — which was tied to RIL — only the day before and was hence pulling out as judge.

Judiciary norms also require that a judge — while on any corporate case — declare in advance if he or his family has an economic interest in the company being adjudged. If lawyers of both parties in a case do not have objection to the judge having an interest in the company, the case goes on.

On the first day of the case itself, Justice Raveendran had declared he owned shares of both companies, following which both counsels had given a go-ahead to the trial.

Jethmalani takes on RIL

However, soon after the judge pulled out on Wednesday, counsels for the warring companies, Mukesh Ambani-owned RIL and Anil Ambani-promoted Reliance Natural Resources (RNRL) pulled punches at each other with RNRL counsel Ram Jethmalani accusing RIL of pulling the strings to make the judge recuse himself because “RIL had been upset with the newspapers reporting that justice Raveendran was asking some inconvenient questions not to the liking of RIL”.

In a statement issued to the press, Jethmalani said, “On Friday, during the course of conference with my clients and lawyers, I was informed by one of them that RIL had been in touch with the press and asking them to be present in the court on Wednesday because there is going to be a sensational development.  We were wondering what it would be. We never imagined that what would happen is the recusal of one of our excellent judges from the bench hearing our matter.”

“My conviction is strengthened by the [fact that the] two counsels for RIL and the government made no effort to persuade the learned judge to change his mind. RIL was aware that a lawyer from the same firm AZB & Partners was not only attending the hearings but was also advising RIL in some matters. It was their plain duty to disclose this before the hearing,” Jethmalani said.

RIL had earlier stated that it was unaware that Raveendran’s daughter was working for the company’s advisory firm. “RIL was neither aware nor AZB & Partners informed us that Justice Raveendran's daughter is associated with the Bangalore office of AZB,” the company said in a statement. “This fact came as a surprise to our senior counsel and us. AZB & Partners who have been advising us from time to time should have informed us of this fact and RIL regrets that six working days of the honourable court were lost."

RIL Counsel responds

Soon after Jethmalani’s attack, RIL counsel Harish Salve, in an interview to CNBC-TV18, said the counsel’s statements should be “treated with the contempt it deserves”.

“Ram Jethmalani has hit a new low,” he said. “This is just another attempt to disrupt court proceedings. We will respond if he (Jethmalani) brings up the allegations in court.”

Salve said that he was “shocked” when Justice Raveendran made the disclosure on Wednesday.

‘Judge should have pulled out before’

“Justice Raveendran should have recused himself at the very first instance when he disclosed he had shares in the companies,” said Supreme Court Senior Lawyer Prashant Bhushan. “The principle that if a judge has shares in a company he only needs to disclose them and can continue if the lawyers do not object is not correct,” he said, adding that lawyers preferred to not object to judges whom they may need to face later in other cases.

The Supreme Court began hearing arguments on October 20 in the case that involves a deal by RIL to sell gas to RNRL at below the price set by the government.

The court will determine whether Reliance Industries stands to make or lose billions of dollars on sales of gas from its major find in the Krishna Godavari Basin off India's east coast.