The main problem is that you are not checking if the query returned any results or an empty set. You are just checking whether the query is successful. mysql_query() would return false only when the query is wrong. In your case the query is correct, so $display = mysql_query(); will always evaluate to a non-false value.
To solve this, you should check how many rows mysql_query() returns using mysql_num_rows(). So let's rewrite your code.
$query = "SELECT * FROM seats WHERE SeatStatus = 1";
$result = @mysql_query($query);
$display = (mysql_num_rows($result) == 1);
$disable = $display?'':'disabled="disabled"';
<input name="ch1" type="checkbox" id="A1" value="" <?php echo $disable; ?>/>;
Hope that helps...
Peace...