Is the teacher justified ?

I was listening to the radio this morning and there was a case where an elementary school teacher was facing backlash.

This teacher assigned a project and gave the students a week to complete it (Dec. 2-Dec. 9). Out of the 28 students that she has, only 11 completed the project. When the teacher asked the parents why their kids had not completed the project they said it was because they were busy with the holidays and didn't have time to complete it (whatever that means).

The teacher then decided to reward the 11 students who did complete the project with a cupcake party in which the other 17 students who didn't complete the project were not allowed to attend or have a cupcake. Now parents are upset at the teacher because their kids are not allowed to go to this party for not completing the project.

Do you think the teacher is right and justified or the parents ?

EDIT

Since there's a lot of arguments about the age of the students, I wanted to state that this school is in my city in which the grade levels range from 1st to 6th grade. The students in this instance were in 4th grade with this being their only teacher/class