Yes, this was very bad dojo etiquette for both students. However, the sensei, in his wisdom, may have been more aware of what was going on than you think. If he had interfered, they may not have learned the valuable lesson on their own, and might in the future repeat the same mistake, which is TO REMAIN IN CONTROL OF ONESELF. Some lessons like these can be taught but they sometimes have more value and are remembered longer when experienced. Please don't rush to judge the sensei in this case. I believe the mudansha learned his lesson and acknowledged his mistake. This will remain with him for a long, long time.