I would like to advise you that before taking the step towards divorce, you exhaust all other options of settling matters between you and your wife as divorces can be difficult for children and affect their life for a very long time. If you don’t want to go through the process of divorce, you can settle the matter amicably within the family itself to come to common grounds and consent to living together without any intervention from the court. If the issues are not concluding, you can go for mediation which is out of court settlement process. In mediation, a non-bias third party will negotiate things between you and the families so that there is no process of court-involved. It is a more friendly and quick way of concluding without all the procedures of the court and also the child will be kept away from the court meetings.
Even after mediation if there is no solution, then you can file for divorce at family court under Hindu Marriage Act, 1955. Under section 13(1) of the act, you can apply to the ground of cruelty because you have mentioned that her behavior is affecting you. You can also claim divorce under insanity because of the fact you have mentioned that her mind is not stable and it had become difficult for you to live with her.
Once the divorce is finalized, the family court decides the matter of child custody among the parents. Under Indian laws, custody can be joint where both the parents have an equal right to the child or one parent will have the right over the child and the other will be allowed for visitation on the days decided by the court. For couples married under Hindu Marriage Act, 1955, the custody of their child is governed under Hindu Minority and Guardianship Act 1956. As per this act, it is mandatory that the custody of the child up to the age of 5years will be with the mother as she is treated as the guardian in such cases and it is deemed necessary for the child to live with the mother at that age. Therefore, in your case also the custody of the daughter will be with her mother as she is 3 years old but if you can prove to the court that the mother is not stable enough to take care of the child or she will be a threat to the child, then the court will take into consideration that the custody is given to the father.