Hello,
A sticky situation to be sure. It's hard to know what to do but it is always easy to second guess a decision and tell someone what they should have done, don't you agree ?
I am not an advocate of physical punishment since in effect you have just done to the child the very thing you were trying to tell them was wrong. Perhaps his parents were upset because they feel the same way ? Hard to say without all the back ground information. Give them a bit of time to calm down, then offer an explanation and an apology and put the matter to rest.
My personal feeling is that everyone, parents, grandparents, aunts uncles, extended family can and should be responsible for a child's upbringing which includes punishment if needed. When I was small we lived in a very small town and not only did everyone watch out for one another, but we also were not able to get away with anything ! The phone would be ringing before we even got home to inform my grandmother that we had been seen snapping the roses off of Mr Worley's prize bushes, etc etc. Now it's more like " don't you dare say my child did that" with no one taking responsibility for or accepting the task for properly raising a child. Which does, again in my opinion, take more the just the parents. It involves the entire family, teachers, pastors, etc etc.
You did what you felt was right at the time as many of us do. Now try to understand why your children feel the way they do and resolve the situation before it turns into a life long affair.
Good Luck !