1. If the title of the property in favour of the MIL is not questioned, then she can deal with her said property in any way she feels like, including registering a gift deed in favour of her DIL.
2. Once the Gift Deed is registered in favour of the DIL, other legal heirs can not challenge the same as per law.
3. Registered Gift Deed is not revocable for which the gift can not be revoked by the MIL.
4. After the gift deed is registered, the said gifted property becomes the property of the DIL which can not be claimed by the legal heirs of the MIL after her death.
5. You can ask the seller to complete the mutation process before selling her said property or at least apply for the same.
6. Unless it is proved that the MIL was not the rightful owner of the said property or the said gift deed was registered under coercion or that the photograph and/or signature of the donor is false, then the other legal heirs can not challenge the said gift deed and pray for its cancellation.