I would say that a generally A/B student should be taking an MFL.
No-one's quite sure where we're going with all this Ebacc malarkey, so for an able dc, aiming at University, it's daft not to take one.
It's a very odd stance for school to take, as 'number of students achieving Ebacc' is quite high profile atm, so it's in the school's interest, in terms of published achievement, for your dnephew to scrape a C in French rather than getting an A* in Drama or for that matter in a second Humanity subject.
(Not saying I agree with this - I don't - but it's how the beans are currently being counted.)
I would be smelling a rat re: staffing (is the school struggling to recruit/retain MFL teachers?) or classroom management.
Tbh, I'd be strongly suspecting that your dn is being a little sod & creating a level of disruption whereby he's being removed from the teaching group for the good of the others - if it were just a case of him slacking & underachieving I'd expect him to be being told to pull his socks up, not bounced out entirely.
Might be doing him a complete injustice there though! I'd definitely suggest his parents contact school on Monday to express their dissatisfaction/ask for clarification.