Sure. As long as they are having fun.
They weren't. As evidenced by two players being really fed up and taking the matter up. Which was then shut down with a "**** your fun, that's my rules" by you.
You keep insisting that you 'had to do this' or 'it was that, or kill them'. But seriously, what your NPC's do is your choice, exactly like the comment "but that's what my character would do!" is a bad excuse for being an arse. What your NPC's do is your choice, and if that choice isn't centred around making the players have fun, it's a bad choice.
There's a thousand ways you could have had this paladin act that didn't spoil the fun for your players, but you choose the one that did spoil their fun, as evidenced
Give me one single coherent reason for this, that isn't "because that ruins the finely crafted story i want to tell my players". Just one.but I cant remove an NPC because players didnt like him, if players dont like an NPC
Yes you can, and yes you should. If the players find that a certain element makes the game significantly less fun - and there isn't a significant long term reason that will improve the fun - you can, and should remove said element*.
Of course you don't have to listen to us, but there's a reason that so many in here decry your reasoning, because they have a lot of experience, and knows that changing your playstyle would make it a lot more fun for everyone involved.
But hey, I get to play in two campaigns (one as a ST) where we regularly have open, mature and respectful discussions about how to make the campaigns more satisfactory for everyone involved, the hell do I know about RPG's?
*Keeping in mind that short-term fun can be sacrificed if the long-term gains are big enough, but doing so should always be a concious choice, and when approached on the matter, it should always be honest - saying "I'm aware that I'm sacrificing short term fun, but trust me a bit on this, it'll be worth it" not "Drop it. Whether you like it or not, I'm in charge of this game."