I would intervene every single time I heard them say "no," and say, "she *is* allowed to do that."
And after the second one, I would say, "Please don't try to discipline my daughter when I am *right here.* If you think she's doing something wrong, feel free to come and get me."
And I might say as well, "I think DD would respond better if you didn't speak to her so sternly. Here, sweetie, come play in your room for a little while." And shut the door.