Is it permissible for a family to claim ownership of land inhabited by people for over one hundred years, without any documents or proofs, merely because one of their ancestors was a member of parliament during the British administration?

If there is no clear proof of their ownership of the land, then they have no right to demand compensation for it. You must swear an oath that you do not know of their ownership of it, based on the Prophet's (peace be upon him) saying: "The burden of proof is on the claimant, and the oath is on him who denies." If the oath is to deny the action of another, then it is to deny knowledge. It is recommended to refer the matter to the judiciary to resolve the dispute.