Partner Catches Thrown Ball - We had a few laughs

[JPaco54]

Last night, I am L - two man, HS Boys Church league, post player receives ball, turns towards basket, has no shot, turns back out and throws a perfect chest pass to my partner who catches it...it seemed like time stopped for 10 seconds...everyone looking at him as if what are you going to do now...someone yells "Shoot!"...he reacts after a half second and just drops the ball and says. " Play on."....I had a hard time keeping my whistle in my mouth. Funny moment...At the end of the quarter, we talked about this and we think we should have whistled it dead and went with AP arrow.

I have searched high and low in case book - rules and on this forum to get some insight on this situation but I could not find any similar case situations.

Please advise - proper ruling. Thanks!