I am married for 7 years. Ever since I married, I have been severely abused by my in-laws. There is no physical abuse. But mental. My husband was also verbally abusive in the first 4 years, but after the birth of our little daughter, he has been slowly understanding, helpful and even loving. He is very attached to our daughter and therefore I don't feel overly stressed out.

Prior to our marriage the husband's properties - He has two apartments, has been in modified to their name- one is father-in-law and husband and other one is mother in law alone. Both the EMIs are paid by us. We were not allowed to stay in either of the apartments. Both are in different cities in India, and are occupied by the in-laws.

I am not allowed to quit job or take a break. When met, they curse me, harass me and even curse the child. My mind is never in peace. I am always in the fear of meeting them and trouble occurring. Without provocation, they are saying the houses will not be given to anyone and it is their sole asset.

Asset handling is secondary. Please advise me how to manage the mental abuse.. Reporting to police may result in divorce, isn't it? How do you as a third party see this situation?

Please tell us how religious the in-laws are, and whether or not the laws regarding divorce are strict in your area of India.
Most of us here are from the US, Canada, Europe, or Australia.
I do know from the few Indians I know that it is common to support the husband's family, sometimes to an extreme.
And that the wife's parents don't usually step in to help. You are just expected to do what your husband wants.

Who takes care of your child while you are at work?
What does it mean that you are not allowed to quit your job? If you quit, what will happen? If you refuse to turn over your paycheck, what will happen?
Do you and your husband rent, or own, or live with his family, or yours?

This is not a police matter, because there is no physical abuse.

Marriages in some parts of the world are very strange to those of us who expect to share and make decisions together, and we can just walk away, refuse, and easily file for divorce.
Of course most of us think your paychecks should go to savings for your child and some of it for yourself. I'm sure that their tradition finds nothing wrong with demanding that you support your husband's family. I wonder if you can sit down alone with your husband? A lot depends on how all the finances in the household work.
His treatment of you in terms of kindness and caring are another matter. All you can do is express how much it hurts. You can say that you think that showing tenderness is good for raising a child. But again, generations of how wives have been treated might be all he understands.

What would happen if you told your in laws to leave you alone, and drop their crap? How would your husband react? How has he reacted when you told him you don't like being abused and humiliated by his parents? Why are you afraid of running into them if they are in different cities? I also would like to know why you have let THEIR bad behavior rule your life when they aren't there?

Where are YOUR parents and relatives? You obviously need a way to not let these people get under your skin, and if leaving them alone, or ignoring them doesn't work, then you must find the strength within yourself to overcome the challenge of your own fear which starts in YOUR house and the relationship with your husband.

Taking a break, and running from the problem solves nothing, and adds to the stress, so your solution is with your husband, who though he may be bound to support financially his parents, he must still support his wife emotionally, yet YOU as a wife must do your part to keep your own dignity, as insulation against the bad behavior of others.

Indeed once you have your own dignity and self respect on SOLID ground, no one can shake it, and they become just annoyances instead of causes of stress. Then you can dismiss them for the fools they are. You cannot change a fool, or his behavior, but you can change what you do about them so it doesn't affect you adversely emotionally, and in this case, since you cannot kick them out, DISMISS them as being SEVERELY flawed lunatics, tell them so, and offer prayers for their deliverance from INSANITY!

That's how you handle FOOLS, and keep them from stressing you out, and driving YOU crazy! I suspect your husband was abused also, I mean think on it, how could he NOT have been?

Was this marriage arranged?

It isn't that easy.
Marriage in many parts of India really is ruled with an iron fist throughout the husband's family, the wife's family is expected to stay out of it or suffer considerable shame themselves, and the woman literally has nowhere to turn.