The incident occurred in Kotiyal village about five km from Uttarkashi district on Thursday night when Lal Bahadur, his wife Sita and his two brothers Rohit Thapa and Raju Thapa were sleeping at home, police said.
Lal and his two brothers had drinks with their neighbours Karan Bahadur and Chandu that night.
They had an argument when Karan and Chandu wanted to have more drinks and Lal declined saying it was too late and time to go to bed, police said.
Karan and Chandu fought with Lal insisting on more drinks and left his place in a huff.
However, they returned late in the night, bolted Lal's house from outside, threw kerosene into it through the windows and set it on fire when he and his family were fast asleep.
By the time villagers extinguished the fire, Lal, his wife Sita and brother Rohit had died.
Lal's other brother Raju Thapa who received 30 per cent burns in the blaze has been referred to a hospital in Uttarkashi. No arrests have been made so far in this connection, police said, adding efforts are on to trace Karan and Chandu who are at large.