The clashes soon flared up into rioting - many shops and vehicles were set on fire and there were incidents of stone throwing.
On Friday, clashes ensued between 2 groups after illegal water connection to a "religious place" was reportedly disconnected.
Police forces were rushed to the locality but they failed to control the violence and resorted to caning and firing teargas shells and plastic bullets to quell the rampaging crowds, according to media report.
The district administration has clamped prohibitory orders under CrPC Section 144 and suspended Internet services.
Meanwhile, Special Inspector General of Police (Aurangabad range) Milind Bharambe, who is officiating as Aurangabad Police Commissioner, said: "The situation has returned to normal now". Several police teams have been formed to investigate the incidents that took place in multiple pockets of the city.
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"The police reached the scene on time, but could not control the mob, and the clashes later gained momentum", he said.
According to local sources, tension had been brewing in Moti Karanja for the past few days because of a civic drive against illegal water connections.
Opposition Congress state President Ashok Chavan called upon the people to maintain peace and "foil the nefarious designs of communal and divisive forces" trying to spread social unrest between communities.
Shahganj, Nawabpura, Rajabazaar and Angribaug were the areas that faced the worst of the violence, but have been calmed down for now.
"We have appealed to people not to believe in rumours and help the police in maintaining law and order", Bharambe added. City police and reserve police force have been deployed to bring the situation under control. Hundreds of youths taking turned violent and indulged in stone pelting on streets. Mr. Bansile's shop was among those torched by the rioters and he could not escape as he was disabled. Chief Minister Devendra Fadnavis has condemned the situation and Minister of State for Home Deepak Kesarkar has left to visit the area, to survey the damage done to the people and the physical property.