Can builder ask for money if the property has no authorized sanction?

You need to convey in writing through Regd. post to the builder that he needs to get all the prior approvals and sanctions from the authorities and only then will you be in a position to pay him the installment amount as it is a mandatory requirements for the banks while granting home loans.

However, if the builder still does not obtain the requisite sanctions, you can approach the Housing Board and file a written complaint stating that the builder has not obtained prior sanctions and the Board shall take action. This way the builder will have to obtain the approvals / sanctions or else his construction would not be allowed to proceed.

You can also file a criminal complaint against the builder for deceiving you and dishonestly extracting monies from you thereby cheating you.