Mukherjee, 83, has been suffering from chronic renal failure for the past few months and was admitted to Lilavati Hospital Saturday at 3.30 p.m. for pneumonia and sepsis.
According to hospital officials, the reputed director was kept on ventilator since his admission and he is responding to treatment. However, doctors describe his condition is serious.
"Particularly because of his age his condition could be said to be 'serious'. But he is responding to treatment," a hospital spokesperson said.
Mukherjee was undergoing dialysis four times a week at the hospital for the last few months.
The maverick director's oeuvre has a worthwhile collection - he made classics like "Anari" (1959), "Anuradha" (1960), "Anand" (1970), "Abhimaan" (1973) and "Golmaal" (1979). "Anuradha" starring Balraj Sahni and Leela Naidu won the president's gold medal.
Apart from making films, he also served as a chairman of the Central Board of Film Certification and National Film Development Corporation.
He was awarded the Dadasaheb Phalke Award in 2000 and on Jan 26, 2001, he was honoured with the Padma Vibhushan for his contribution to Indian Cinema.