What is permissible and impermissible on a side terrace?

You need written permission from the society and local municipal body to put up a permanent structure in the side terrace of your flat. 

You have the right to privacy within your residence. And the neighboring flat owners need to ensure that their wanton acts do not infringe your rights. And the Society needs to use its good offices in maintaining such a healthy atmosphere.

However, is not the proposed construction an overreaction. Certainly, you need to obtain the approval of the Society and the permission from the competent local authority for undertaking such a construction. 

Seek necessary permission from local concerned authorities through Managing Committee of the Society and proceed.

It would be better to seek professional services of a local prudent lawyer for appreciation of facts, advise and necessary proceeding