It wasn't a bad decision at all.
A manager who doesn't check in on the league and keep his roster up to date is the exact same as an inactive manager.
If he really wants it so bad then yes, give it back but tell him to stay on top of things or it will most definitely happen again.
Just because he shows interest of his team once it was taken away doesn't mean he had interest in the league before that happened
Good choice an inactive player should have there team removed its tough on others that at least come out here once a week too many active managers out there to have one that dont care in the real world he would of been fired