So I contacted a lawyer and they said a valid passport with atleast 6 months validity is required. They advised to apply for renewal and update IRCC.
Now we just have to figure out how to apply for Indian passport renewal without a valid status.
I hesitate to contradict a lawyer, but: it's important to draw a distinction between the formal requirements and what/when the requirements actually take effect.
As I've stated: yes, you need a valid passport to submit an application. You already did that.
As of NOW - while you wait for the final approval - the question is whether physically/administratively they will REQUIRE you to present your valid passport, or go back and see that your previously-presented passport remains valid.
And I repeat: it is my understanding and experience from following threads on this for quite some time, is that those who are IN and remain in Canada are not asked to do so. Instead the procedure is that they receive an invitation to complete a virtual landing, in which they need to submit (scans of) photos for the PR card, and ... no requirement to present a passport. You complete that process, you get an eCOPR confirming you are a permanent resident, and in due course you get the PR card.
Anyone you ask might well say 'need to have a valid passport to apply' and that's true. But they're not answering the question of whether you need it at the particular stage you are at.
Now, OF COURSE, please pursue in parallel ways to renew your Indian passport. My understanding is that this is quite problematic for those who are out of status. If you find a way to do so while in Canada, great, let others know.
But I'd suggest you can also check the various threads for in-country applicants / virtual landing and inquire whether ANYONE has been asked to submit a valid passport at the moment they get the invitation to the virtual landing portal through to getting their PR card. Because that's the relevant question.