Ref. No. 39 / 805
In the name of Allah the most Gracious the most Merciful
The answer to your question is as follows:
The fees that are agreed between two parties are valid but the fine that is levied in case of delay in payment is usury and interest which, as per Islamic rulings, is forbidden; hence it is not permissible to willingly pay or receive it.
Nevertheless, if one is forced to pay it, and there is no way to avoid it, then the payer is excused and the sin falls on the one who charges it.
And Allah knows best
Darul Uloom Waqf Deoband
This answer was collected from the official website of Darul Uloom Deoband Waqf. The institution is based in India and the answers are provided in accordance to the Hanafi Fiqh.