Police are under investigation over an operation at a Fitzroy property that left a man undergoing surgery for serious fractures to his arm following an arrest that is being treated as a case of mistaken identity.

Residents say heavily armed officers stormed the apartment attached to gay community bookshop and cafe Hares & Hyenas on Johnston Street about 2am on Saturday while searching for what residents were told was an "armed member of a 'Lebanese' gang".

The raid took place in the apartment above the Hares & Hyenas bookshop and cafe. Credit:Chris Hopkins

A description of the incident was posted on Facebook by bookshop owners Crusader Hillis and Rowland Thomson, who say police were at the wrong property, failed to properly identify themselves and caused serious injuries to another man, Nik Dimopoulos, while restraining him.

"They just stormed into a dark room shining torches and it was impossible to identify them as police. Nik Dimopoulos, thinking that it was an anti-gay home invasion, rushed out the door, downstairs and on to the street where he was forcefully detained. At no time did the police when they were chasing him say 'stop, police' as you would expect," the post said.