No one was hurt in the mishap, they said.
The repair work of a portion at the three-storey structure was in progress when it collapsed last evening at around 5.30 PM at the Bail Bazaar locality in Kalyan township of Thane district, Kalyan-Dombivili Municipal Corporation's disaster control cell chief Anil Laad said.
The building is said to be around 80 years old where the repair work was apparently going on for last two weeks.
Some people were about to get into the premises to offer evening prayers, but they stepped back as they saw the structure crashing down, sources said.
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Later, the firemen carried out work to remove the debris from the premises, Laad said.
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A senior officer of North Delhi Municipal Corporation (NDMC) said the collapse was caused by demolition work undertaken by its owner on the third floor of the building.
The building is located on a plot of 70 sqm in the cloth market area in the Walled City's Lahori Gate.
"Some demolition work was carried out by the owner on the half portion of the third floor which caved in and under the weight of the debris, the second floor of the building also collapsed," he said.