The question is unclear about several aspects. Deriving what could be done from the scanty information, the issue is re-framed as:
1. The purchasers of the flat in question, were father (F) and grandmother.(GM).
2. There is a power of attorney. Principal is the purchasers and the attorney is grandfather (GP)
3.This GPA was to represent the purchasers at the time of registration of flat, besides attanding to miscellaneous matters relating to builder.
4.Flat is not registered yet. To this extent the GPA remains unavailed of the power conferred upon the attorney. Also the Vendor (builder), has to fulfil his obligations of execution of sale deed, at the cost of the Purchaser.
5. The attorney has died.
6. Agreement of sale is an unregistered document.
7.Possession of the flat has been handed over and the purchasers are in possession and enjoyment either themselves or through a tenant, relative etc.
8.The principals F and GM are alive.
9. Neighbour is creating obstruction of peaceful enjoyment of the property by unauthorised encroachment of the common area.
The matter involves several statutes.
The State Stamp Act, Indian Registration Act, Contract Act, Apartment Ownership Act, Easements Act .
Power of Attorney gets automatically cancelled when either the principal or the attorney dies. So, in your case the GPA in question has also died and no right thereunder flows to the successors of the attorney.
Do you have a document evidencing possession like handing over of possession letter or possession certificate? This document is important to prove legal possession of the flat, having paid full consideration, though registration is not done.
You have three issues involved:
(1) F and GM are the purchasers. So, they have to enforce their right to get the deed executed by the builder. A specific performance suit can be explored,subject to the law of limitation, to be examined in the light of specific clauses of the agreement of sale.
(2) If any society of flat owners has been formed then it is the responsibility of the society to maintain common areas. Maintenance includes prevention of encroachment.
(3)Possession of the flat is sufficient enough 'locus standi' for maintaing a suit for injunction against the encroacher. Either the society or the person affected, viz F and GM can be the plaintiffs.
More facts may get addition/alteration/amendment in the answer given.