Khaalujaan (Naseeruddin Shah) and his nephew Babban (Arshad Warsi), who are partners in crime, pose as a Nawab and his attendant, and manage to run away with a prized necklace from a jewellery shop. During the police chase, they get separated; Babban escapes, Khalujaan is injured, and the necklace seemingly lost. Babban goes to meet his boss Mushtaq Bhai (Salman Shahid), who disbelieves him, accuses him of double-crossing his boss in cahoots with his uncle Khaalujaan, gives him a death sentence, and orders him to dig his own grave. Babban duly begins to dig a grave under supervision, but manages to escape, with the promise that he will bring back both the necklace and Khaalujaan.
Months later, Babban comes across Khalujaan, who is posing as a Nawab and attending a poetry contest. It is a mushaira (gathering of poets) organised by Begum Para (Madhuri Dixit), the widowed Begum of Majidabad, supposedly in compliance with the wishes of her deceased husband. The winner of the poetry contest will no only win the widowed Begum as his bride, and also become the Nawab of Majidabad.
Babban confronts Khalujaan on the opening night of the contest, and tries to get him to return with him. However, Babban himself delays departure after falling in love at first sight with Muniya (Huma Qureshi), Begum Para’s beautiful maid and constant companion. Meanwhile, Khalujaan has his task cut out. He needs to fool the gathering into accepting him as an aristocrat of high lineage, win the poetry contest if possible, and seduce the Begum whether or not that happens. One of the other contestants is a local politician and gangster named Jaan Mohammed (Vijay Raaz), who is holding the poet Nawab Italwi (Manoj Pahwa) in captivity, forcing him to write poetry for Jaan to recite at the contest. The contest proceeds; while Khalujaan has his heart set on Begum Para herself, Babban is smitten with Muniya. Khalujaan tries to impress the Begum by gifting her the prized necklace which he had stolen earlier, but on the final day, Begum declares Jaan Mohammed to be the victor. She declares that she will marry Jaan Mohammad and that he will become the new Nawab of Majidabad.
