Kelly was convicted for his part in planting a bomb on the Shankill Road, North Belfast, Northern Ireland, intending to kill Johnny Adair and senior members of the Ulster Defence Association. The bomb exploded prematurely, killing nine Protestant civilians. An 11-second fuse was meant to detonate the bomb after they had shouted a warning. Thomas Begley, a fellow volunteer in the Belfast Brigade, was killed in the botched attack, which left Kelly injured; he lost an eye and has limited use of his left arm. Kelly was arrested after being picked up by rescuers searching for survivors in the wreckage. Kelly was sentenced to nine terms of life imprisonment at his trial in January 1995. The judge at his trial, Lord Justice McDermott, said: "This wanton slaughter of so many innocent people must rank as one of the most outrageous atrocities endured by the people of this province in the last quarter of a century."
Kelly served seven years of his life sentence and was released in July 2000 under the terms of the Good Friday Agreement. During the Holy Cross dispute, Kelly was reported by Lt. Col. Tim Collins to be present during republican violence in Ardoyne. Kelly was returned to prison on 18 June 2005 when his early release was suspended amid allegations that he had been involved in rioting. Sinn Féin claimed he was trying to calm tensions. Peter Hain, Northern Ireland Secretary, said that he had directed the arrest and return to prison of Sean Kelly on the basis of ‘security information’ available to him. He said he was satisfied that Sean Kelly "had become re-involved in terrorism". He was re-released on 28 July later the same year. The next day the IRA ordered an end to its armed campaign.
Arrest after shooting incident
In February 2013, Kelly was arrested in connection with a shooting incident which resulted in an 18-year-old male requiring emergency hospital treatment, after being shot in both legs, in what was described was a paramilitary-style attack. The PSNI later said that following inquiries, it was no longer being treated as such, but rather as a shooting. First minister Peter Robinson said the arrest could have "grave consequences" for the political process and called for a meeting with PSNI Chief ConstableMatt Baggott, to find out how police are able to say that the shooting is not linked to paramilitaries and also to establish the background of the case.