I read somewhere that we can apply to hold the domain if the domain fees is not paid according to ICANN rules. My registrar seems to have a problem with that. Can anyone direct me to the relevant section of ICANN rules that say this?

not ICANN, the registrar who hold the domain if fees aren't paid.

That means it is the registrar who decides these rules not ICANN?

its up to the registrar to hold it or delete it on the same day.

and the rules i believe been placed by icann and this case its possible to change the time. from 1 - 45 days hold or instant delete.

No, not that. For eg I paid for a client who never paid me. How do I hold and ensure that the domain is inactive.....

You can change the nameservers somewhere to park the domain.
Of course if you stll have access to do it.

No, I dun normally I pass the passwords to the users immediately upon registration : ( But I manage to lock them thats all. Any remedy from ICANN?