Q: Is it okay to pray behind an Imam who prays while seated because he cannot stand?
A: If the Imam cannot stand in an obligatory prayer his leadership is invalid.
An exception to this rule would be if no one else in the congregation can stand. In this case, it is valid.
Another exception would be if the appointed imām was temporarily unable to stand and expected to recover. In this case, it is also valid and is recommended for those behind him to pray seated even if they possess the ability to stand. It is, however, valid for the congregation to pray while standing.
If the Imam began leading prayer with the congregants while he was standing and then sat during prayer due to incapacity, they are obliged to complete the prayer standing.
Source: Sharh al-Muntaha, Kashshaf, Hidayat al-Raghib