A magisterial probe has been ordered into the incident which occurred on Kharar-Landran road, about 20 km from here, they said.
"The commercial building collapsed when a JCB machine was digging an adjoining plot for construction of basement," Kharar Sub-Divisional Magistrate (SDM) Himanshu Jain said.
Two persons were rescued and one of them admitted to a local hospital with a fractured arm. Two other trapped persons including the JCB machine operator were in touch with rescue workers through mobile phones for some time, said Jain adding the rescuers were close to reaching them.
The officials said the heavy earth moving machine might have hit the foundation of the building, but added that the exact cause of the incident would be known after the inquiry.
A 30-member team of the National Disaster Response Force was engaged in the rescue operation and one more NDRF team from Ludhiana has also been called, the SDM, adding that police and civil administration personnel and members of some NGOs were also providing assistance in the rescue operation.
The SDM said that the exact number of persons trapped under the debris is not clear.
“We have made all arrangements for undertaking rescue operation at night to ensure nobody remains under the debris," Jain said.
"Sniffer dogs have been pressed into service to help trace the trapped people," he said.
Mohali Deputy Commissioner Girish Dayalan said that the SDM of Kharar has been ordered to inquire into the incident and submit a report within three days.
"How did this happen and did they (builder) have requisite permission to do this will be known only after the inquiry," said Dayalan.
The Army has also been put on standby to assist in the rescue operation in case the need arises, said the DC.
Requisite machinery and equipment were pressed into service in the rescue operation, said the SDM.
Chief Minister Amarinder Singh expressed anguish over the building collapse incident and said he has sought a detailed report from the Mohali Deputy Commissioner.
"Anguished to learn of the collapse of a three-storeyed building in Kharar today with 2 people trapped. @NDRF , Fire Brigade & Mohali Admin are on the spot for immediate rescue and relief. Have asked DC Mohali @GirishDayalan to send a detailed report on what caused this collapse," Singh tweeted.