That seems rather harsh. It's a fairly common mistake for weaker players to confuse a natural 2NT with an Unusual 2NT, at least in the UK. I think double from North is completely normal. He's got good defence, his opponents have already signed off twice and are clearly bidding like idiots, his partner has acted at the four level and he has no desire at all to encourage him to bid any higher. South's pass also seems fine to me. His hand has its uses opposite both minors but it's hardly a thing of beauty and 4♣ was probably enough. Now partner has decided he wants to double the opposition and you don't have any major reason to overrule him. As for the ruling, East/West's bidding is so abysmal (aka 'wild') that I'd let them keep whatever they got in 4♠X. However, it does seem clear that East was about to pass when he heard the alert and lost all his faculties, so we'd have to adjust North/South's score. The director should talk to them to see what they might have bid over a pass from East, poll some other players and see if he can figure out where they might have been heading.