First find out from municipal authorities that your lane comes purely in the category of residential area and commercial activity is prohibited.  If so, you can ask the authorities to shut the shop.  If it is mixed area allowing some commercial activity, then approach the authority to declare your area purely residential and once such notification is issued, you can take up further action to get the shop shut. 

yes you can take legal action by way of PIL. 1st you have to verify the vending zone. You have to collect the document regarding the vending zone provision. Which area is covered.

Jyotirmaya Prasad Behera

Advocate, Orissa High Court

9861819294

As you said its purely residential area then you can oppose collectively. Take advice of lawyer or search google how to proceed in the matter to stop the nuisance.

Thank me by clicking on thumbs up just below my profile, if you like my suggestion.

Dear Mr. Samarpan, Thank you for your reply. I have officially complained in municipal corporation office regarding this.

Now shop keeper is telling me that he has many big references in coroporation and you cann't do anything. I know it is going to be long fight. Could you please let me know that where can I find laws\which law,  which states that it is not allowed to do commercial activity in residential area?

Is it possible that I have to step back if they have big contacts? Some guidance would be appreciated.