Two officials have been suspended for negligence: the deputy municipal commissioner of Thane civic body Dipak Chavan and senior police inspector of Daighar Kishor Naik.
The families of each of the deceased will get Rs. 2 lakh and the injured Rs. 50,000.
Chief minister Prithviraj Chavan, who visited the site, told the Assembly that the immediate cause of the collapse could have been vibrations from work on laying the foundation of another building nearby.
Following debate on the issue, during which legislators admitted a nexus of politicians-officials-police and the real estate lobby had led to illegal constructions, Chavan announced plans for a cluster redevelopment model.
Thane city has some 5,500 illegal buildings, including 2,000 in Mumbra. According to conservative estimates, there are 1 lakh such structures across the seven municipal councils in the MMR.
A man, who lost 13 members of his family, said he first thought it was an earthquake. Thane civic officials said more bodies could be buried under the debris; rescue work continued late on Friday. Police are on the lookout for the builders — Salim Shaikh, Jamaal Qureshi, Adnan Shaikh — and their partners.