According to the fire department, the incident was reported at around 3.38 AM at a three-storeyed building in the area, following which ten fire tenders were rushed to the spot.
Three brothers lived with their families in the building in close proximity and all the three floors were gutted in the incident. Two nearby houses also caught fire during the incident, police said.
The fire started from the house of one Deendayal in which his five-year-old daughter Gayatri and his sister-in-law Surekha were killed, as they were suffocated to death, they said.
The other severely injured are being treated at the Sanjay Gandhi Memorial Hospital while some of them were discharged after first aid.
"We have registered a case section 304A IPC (Causing death by negligence) in this connection and further investigations are on," a senior police official said.
"The cause of fire seems to be a short circuit. The families used to make mats at their house and when sparks fell on the raw material stashed in the residences, fire spread quickly," he said.