A senior police inspector confirmed the development. "We have received such a circular," he said.
The circular, which was issued by Mumbai Police Commissioner Rakesh Maria on August 20, says policemen should not criticise or make suggestions as to how citizens should behave and what they should wear.
It also says that they do not have any authority to intrude on a citizen's privacy and individual freedom.
Senior inspectors have been asked to display the circular, which is in Marathi, on notice boards in all police stations.
Earlier this month, Mumbai police has rounded up 13 couples and 35 others following raids at hotels and a beach for indecent behaviour in public, provoking a storm in the social media.
Consenting adults who had checked into several hotels in Madh Island and Aksa area were in for a shock when they found policemen knocking on the doors of their rooms and rounding them up.