1. Is there any legal argument that prevents them from charging me holding fees?
You have to go through the contents of the sale agreement which would explain the issues in a better way for this question.
2. Am i allowed to accept handover even if they dont have an OC in hand.
If OC is not given then the flat is unfit for occupation, you should insist on it and refuse to occupy or register the flat without a competent authority issuing a valid OC.
3. Can i choose to tell the builder that i will pay him for handover and take possession only when he gets the OC? Is there any such legality by which i can inform the builder that i am not liable to take handover and take possession unless they have an OC in hand?
Basically OC is the valid certificate that will lead you to safety for occupying and enjoying the completed flat, without which you cannot claim any damages in the future and the authority, if decides to demolish due to deviation, you will be suffering a loss which the builder will not compensate at that stage, he will simply wash away his responsibilities.
4. Is there anything like holding fee in the laws of the karnataka stage and is it legal?
What do you mean by holding fees? Not understood.
5. Am i liable to pay the holding fee if i dont register for the lack of OC on their part?
OC is important for occupying the flat.
6. And most importantly, Are there any legal precedents for the above that i can use in my arguments?
You may have to consult a local lawyer with the a copy of the sale agreement for proper perusal and his opinion on all such legal questions in person.