Can I run micro scale factory in 25 sq. yards in unauthorised residential area in Loni, U.P. ?

Dear Sir, I am handicap person from my legs who lives in Loni, Ghaziabad with my Family. I am running a factory of bone and horn products in 25 sq. yards area of my friend from last 1.5 Months but Yesterday a female neighbour female has came into my factory and fight with me and she called to Police. When I reached the Police Station, they are asking to me about the license of factory and I have no license because it is very small scale factory. The Lady has filed wrong complaint against me that she is disturbing from my factory, like : Noise Pollution & Smell etc, but the reality is that her home is so far my factory like: 25 sq. yard plot and Police has not been found any Noise & Smell Pollution in outside of my factory. Because I used proper precaution like: fragrance chemical. The Police has threated me and ordered to close my factory and informed about to file case against me, the reason is, I have no license to run factory. After some times, they are demanding 30,000 rupees to release me. At the end, they told that you can't run factory in future in residential area (Ilachipur, Loni, Ghaziabad) Today, I have found that Government of India has been issued that No license required for my work. Can I run micro scale factory in 25 sq. yards in unauthorised residential area in Loni, U.P. ?