Hi Pratyush,
I hope you must have got the answer to your problem but for those who are still looking for the same problem, I am posting this reply.
The way you did changes in local.conf file is correct and now what we require is to enable "CONFIG_FHANDLE=y" in .config file and make a patch ,for this, go to terminal inside your build
1 check name and version of your OE-Kernel
$ bitbake --show-versions
2 Now I am having linux-imx as oe-kernel so building for that..
$ bitbake linux-imx -c cleansstate
3 To modify the kernel configuration, run menuconfig via bitbake. Make your changes and save the configuration.
$ bitbake linux-imx -c menuconfig
--here,modify CONFIG_FHANDLE=y (enable it..)
4 The new kernel configuration file you created can be found here.
$tmp/work/imx6dlsabresd-poky-linux-gnueabi/linux-imx/4.1.15-r0/git/.git/.config
check this file if CONFIG_FHANDLE=y present
(my board is i.mx6 duallitesabresd,hence the path accordingly.. you also must be having same kind of path..)
5 go to build location
$ cd to build location
6 Copy that file to where the bitbake recipe for the kernel will use it.
cp tmp/work/imx6dlsabresd-poky-linux-gnueabi/linux-imx/4.1.15-r0/fragment.cfg /sources/meta-jcrdlitesabresd/recipes-kernel/linux-imx/4.1.15-r0
7 run following cmd in series now:
$ bitbake linux-imx -c cleansstate
$ bitbake linux-imx
$ bitbake jcrdlitesabresdimage
now burn your image into sd card and enjoy..