Residents of this famous tourist resort were up in arms against the Uttarakhand High Court order to demolish illegal constructions in Zone 1 and 2 of the city's Master Plan.
People belonging to economically weaker sections reside in these zones and most of the houses constructed there in recent times are said to be illegal.
Ever since the order of the high court was issued on a PIL on Monday, the residents have been demonstrating on the city's streets. They held a silent protest as well as a candlelight march.
With the peace of the otherwise quiet tourist town shattered by the ongoing protests, called Ghar Bachao Andolan, the matter has reached the authorities in the state capital.
"The government is approaching the high court to buy a year's time to settle the issue," local MLA Sarita Arya told PTI on her return from Dehradun.
"We are considering the options including devising a resettlement plan or reviewing the Master Plan to decide safe and unsafe zones," she said.
The Chief Minister and the Principal Secretary (Home) have been briefed about the matter.
There is a need to look into the role of the Lake Development Authority which does not seem to have acted when the poor people purchased the land and constructed houses with their hard-earned money, she said.
The estimated number of people to be affected by such a demolition is well over 7,000, she said.
Kushan Singh Negi, president of Vyapar Mandal, says the mass agitation and people coming out on road for demonstration indicated the pain of the poor who have invested major part of their earnings to have a roof over their heads.
A resident of the area, Dheeraj Joshi, says he doesn't know what will happen if his house is demolished. "Migrating from Nainital is the only option as it is not possible for me to afford a space for my residence even on rent, forget about purchasing.
