Hi Smitha,
First of all, you need to submit only one PCC for your stay in India, if you have travel abroad you need to submit additional PCC accordingly.
Secondly, in Mumbai you can apply to New Passport Office, Worli for PCC. If your passport is issued in Mumbai, you will get PCC on the same day in evening from Passport office itself; otherwise Passport Office will send your details to a police station near your place of stay (you can ask them which police station) here they will do police verification. Generally Passport office sends your details in five working days to Police Station, though you would like to keep in touch with concerned Police Station to speed-up the things, once this part is over it will take another 3-4 weeks for you to receive PCC that will be via Speed Post.
At passport office you need to submit duly filled Form 2 & Personal Particular From, 2 photos, copy of your passport, communication from embassy asking for PCC. Also at the time of application Passport office will take your Passport and will return it with PCC.
Spouse can submit each others' and children's' application.
Hope I have answered your questions!