The building, property No.2585 in Gali Shankar, falls within the City zone of NDMC, a senior officer said without, however, elaborating on its ownership or purported links with Khan.
Some portions of the five-storey building were dismantled for illegal construction following the demolition order issued by the authority concerned, he added.
"Corruption and illegal construction will not be tolerated and a vigilance inquiry has already been ordered which will bring out the facts of the case related to the building and its linkage, if any, with the sacked minister," said Ravindra Gupta, the North Delhi mayor.
Khan, the Civil Supplies and Environment minister, was summarily sacked by Chief Minister Arvind Kejriwal on October 9 over charges of corruption by a builder.
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Local councillor, AAP's Rakesh Kumar, claimed that Khan was taking undue interest in buildings and MCD affairs although his work was not related to these.
"His influence was responsible for illegal construction of the building against Building By-laws. Not even the plan of the building was passed," he said.
Following the sacking of Khan, Delhi government had also repatriated Deputy Commissioner of City zone A Nedunchezhiyan without giving any reason for the decision.