The deceased were identifed as Armaan (6) and Anand Shashinath (20). The injured include two children and a woman, who were rushed to Acharya Shri Bhikshu Hospital in Moti Nagar.
The fire department received a call about an explosion in Sudarshan Park area at around 7.45 am following which several fire tenders were rushed to the spot.
Eleven persons were rescued from the debris and all were rushed to the hospital, an official of the department said.
The building is owned by one Karanjeet, and he along with his family, relatives and some labourers were injured when the explosion triggered collapse of the upper two floors of the building.
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The ground floor of the building housed a fan-assembling unit where a compressor was installed for painting the manufactured fans. It was this compressor which was at the heart of the incident, officials said.
"A case has been registered at Moti Nagar police station for negligence with machinery and culpable homicide, against unknown persons, as the ownership of the fan-assembling unit is yet to be ascertained," Deputy Commissioner of Police (West) Pushpendra Kumar said.