That's a touching and sad story. It's scary when illiteracy and ignorance come into play masked as religion, it shows you the power of the masses.

Once people are termed as mentally ill, a majority of their rights are snatched from them.

You are spot on there.
What a shameful and heartless act.
I'm sorry to hear that humans acted that way towards another human and sorry that you witnessed that, because these things stay with you for a long time.