1. EC is not a Final & Conclusive Clear-Title document, as far as ownership is concerned. At the most it is persuasive document showing the named persons as legal Occupants.

2. MRO records is the Final & Irrefutable Conclusive proof of Title-Ownership. Here the original owner or his legal heirs, have perpetual rights to successfully challenge such non-registered transaction deeds.

3. The present problem can be solved by executing  Sale Deed between your self and ALL the legal heirs of "X" and present EC holders, wherein all have to unconditionally & mutually & jointly sign as "Consenting & Confirming Parties", to the Sale Deed.

4. Thereafter you have to immediately mutate /transfer the property in the MRO records, based on this Sale Deed.

Deed of confirmation can be executed by legal heirs of X 

it should be duly stamped and registered 

1) notarised sale deed does not confer clear and marketable title to property 

2) it has to be duly stamped and registered 

3) it would be inadmissible in evidence 

4) if legal heirs file suit to claim property take plea that full sale consideration was paid to X .

Sale between x and y is invalid. It had to be through registered sale deed. NOC from X heirs has no value till stamp duty not paid on transaction done between X and Y.

Lacunae can be fix by paying stamp duty on 198. Penalty will also impose. 

Sale and purchase and amount paid may be prove through notary but still x heirs can dispute the sale. Their claim is time barred but trasfer of ownership from X to Y is not valid. 

Tell the builder to take irrevocable POA from all heirs of X.

Yes this will create title issues and defective title may lead to futher problems. You need to rectify the title by executing proper registered sale deeds in the same

The sale of property by X to Y through a  notarized deed is invalid. 

The legal heirs of X can execute a registered rectification deed in favor of the legal heirs of Y, subsequently the legal heirs of Y also can a NOC to C D, and the builder can give an undertaking indemnifying the losses in a possible litigation at a later stage in this regard. 

After that you may obtain a legal opinion and proceed on the recommendation. 

1. Since the property was not sold by a registered document   the legal heirs of deceased may stake a claim over the property. 

2. No.

3. There's no limitation since there's no registered document transferring the property rights. 

Sale Deed without paying stamp duty and  registration is not valid.  However, if the Legal Heirs of Mr. X are willing to give no objection, you need to get executed "Deed of Confirmation" from them.

Title / Ownership does not pass through Notarized Sale Deed.

1) Yes the legal heirs have title over the property.

2) Notary done in 1989 is not legally valid since stamp duty is not paid and not registered.

1. Sale is possible only through a registered sale deed. Notarisation of sale deed does not suffice. The title of Mr.Y is not free and marketable, hence he could not have passed a better title to his two sons C and D.

2. Do not purchase this property. The heirs of Mr.X may file a suit for declaration of the sale deed executed by Mr.X as void and non est.