A blast took place at Indra Colony, Cheema Chowk, here on Thursday and 12 people received burns.
Four people who received serious burns have been referred to Rajendra Hospital in Patiala.
The preliminary investigation reveals that the blast occurred at a house in a congested street.
The house belongs to a man involved in making effigies for Dussehra. According to information, he had kept a significant amount of gunpowder, used in making the effigies, at home, causing the blast.
Commissioner of Police Swapan Sharma said owner Usman Khan had stored potash at his house, which caught fire and resulted in the blast.
The a rea has been searched by a forensic team and a dog squad.
An FIR has been registered.