Shimla, Oct. 15 -- Seventy-four-year-old advocate Satish Sharma and his family spent their life savings building their house in Shimla's Sanjauli area. Today, they are spending sleepless nights watching fresh cracks creep across the floors and walls in the vicinity.

At least 16 buildings in the vicinity have developed similar structural damage, triggering panic among nearly 1,000 local families. The culprit, residents say, is the National Highways Authority of India's (NHAI) underground twin-tunnel project being carved beneath one of the state capital's most densely populated residential belts.

"Though the work has been halted temporarily, we are still afraid of sleeping in the house," said Sharma, a member of the Twin Tunnel Affected J...