"We have started legal proceedings and if it is proved in court that the construction is illegal, the ashram can be declared government land and seized," said Pawan.
The fresh trouble for Asaram emerged even as he spent his fourth day in jail following his arrest on charges of sexually assaulting a 16-year-old girl.
The self-styled godman's ashram on Circular Road is built on around four bighas (1.6 acres). It has a sermon hall, a parikrama marg, rooms and a separate residence for him. Local businessman and director of Bharatpur Grih Nirman Society Uddhav Das Arora has alleged the ashram encroached on his plot.
"He (Arora) showed us the map and prima facie, the plot and road have been encroached on," Pawan said.
The ashram authorities dismissed allegations of encroachment.
Shiva Bhai, a supporter of Asaram, said the plot was given to the ashram by late Congress MLA RP Sharma seven or eight years ago.
"Before the paperwork could be completed, he passed away," said Shiva.