Officials of the Town Planning department sealed the two- storey building which housed a two-wheeler showroom, on the busy Avanashi Road, officials said.
They said the building owned by Poonkolali, Karunanidhi's grand daughter, was constructed without securing a licence to build it.
However the owners rejected the contention and asserted that they have already obtained a stay from Madras High Court.
The City Corporation is currently on a drive to demolish and seal illegal buildings built in violation of rules and which have not adopted safety measures, following the death of four women in a major fire at a commercial complex on April 25.