The structure, which was part of the Bhopal set of Aarakshan, was pulled down following a court order, AFP reports.
Director Prakash Jha commented: "It would have been dismantled within a month. Everyone in Bhopal knew it was a set.
"Shooting had taken place between January and March but the film's schedule was now disrupted. Now we have to work out alternative arrangements."
The film was originally scheduled to take between 60 and 70 days to complete.
An earlier film shoot by Jha in the Madhya Pradesh city was cancelled following protests over shooting in a hospital.
