This is exactly why they don't want the divorce to happen and want Fateh to realize how evil Jasmine is, without acknowledging his pathetic a**. I have no clue why they haven't forced Jasmine out of the house but they probably don't want Fateh to leave with her which would cause gossip and in this way it may seem like Tejo's sister has just come to stay in their house. Don't get how they let them go to restaurants though
In small towns and villages something like this gets around within a day. It's not an apartment in delhi that nobody cares what you're doing.
In my mom's town, there's a guy who has a mistress, it's an open secret. He's a businessman who owns half of the city(like at least 60-70crore property) multitude business, and even his mistress lives in a separate house which he bought. You can absolutely have mistresses, and if you're really powerful like virks are, you can keep them as 'slave' (it's actually a really sad tradition, especially in rural areas) BUT you can't just bring a random woman as a wife.
And btw fateh knows jasmine is evil.