Weird play

I have never seen or heard this before. Pitcher pitches ball. Ball hits catcher's glove and pops up in the air. Batter then swings and hits ball. Is this a dead ball? This play was related to me from a recent tournament.

I was told they ruled dead ball, catcher obstruction and awarded bases. The only way I can see CO called is if the batter's bat made contact with the catcher's glove on the swing. Even if this was the case could / should CO be called?