The fire, apparently caused by a short circuit, broke out at about 2.30 AM in the shop situated at Sardar Patel Marg in Civil Lines police station area.
The shop's owner Sushil Kharbanda lived in a house located in the backyard, police said.
As inflammable material like engine oil and batteries were stored inside the shop, which was by the time shut and its owners asleep in the house, the fire spread very fast and soon engulfed a number of adjacent shops and also reached Kharbanda's house, police said.
The heat woke up the members of the Kharbanda family who rushed out of their house while police and fire brigade were informed about the incident.
Meanwhile, Sushil's 45-year-old widowed sister Shashi, who used to stay in the same house rushed inside to check whether all members of the family had safely exited the house, police said.
However, the house was completely engulfed by the fire soon after Shashi went inside and the hapless members started crying for help though nobody was able to enter their residence because of the soaring flames, police said adding that fire tenders arrived soon afterwards but it took a few hours before the blaze was brought under control.
The body of Shashi, charred beyond recognition, was found inside the house which was completely destroyed in the fire, police said.