The builder, Samir Bhojwani, falsely claimed ownership of the two plots on which the bungalow was built in the upscale Pali Hill area of Bandra, the official said.
Police suspect that Mr Bhojwani forged certain documents to grab the bungalow, he said.
Dilip Kumar's wife Saira Banu recently approached the police and lodged a complaint against Mr Bhojwani following which the offence was registered against the builder on Monday, Deputy Commissioner of Police (EOW) Parag Manere said.
"We are investigating the case thoroughly and action will be taken accordingly," he said.
However, Mr Bhojwani, who is on the run, claimed that his father bought the property in the 1980s from the Mulraj Khatau Trust, he said.
After the offence was registered, a team of EOW sleuths on Monday raided Mr Bhojwani's residence in Bandra from where they seized weapons, including knives and daggers, the police official added.
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