The godman, identified as Sridas from Kerala, was arrested here after a search operation at Baba's residence revealed the plight of the victims, the sources said.
"We have rescued 15 mentally challenged persons from a house in the town and temporarily kept them at the premises of the government hospital here", sub-collector, Bhawanipatna, Jagannath Mohanty said.
Patients with psychiatric problems from various places in the district and outside used to visit the Baba, residing here for over last four years, who claimed to cure the patients with "mantra" and herbal medicine.
The place located near the local Doordarshan Kendra often witnessed heavy turnout as a large number of people came there with the hope of getting cured by the Baba, the sources said.
The Baba allegedly charged the guardians ranging from Rs 10,000 to Rs 60,000 depending on the condition of the patient.
Acting on an information that the patients were being subjected to torture, the district administration swung into action and rescued the patients, Mohanty said.
Stating that the priority was to shift the patients to a suitable place for their wellbeing, Mohanty said if needed they would seek the service of a psychiatrst to treat them.
The Baba did not hold any licence to treat the patients and was using unscientific methods, they said.