Badri (Manoj Joshi) heads a Brahmin family whose ancestral palace is believed to be haunted by the ghost of Manjulika, a Bengali classical dancer. Siddharth (Shiney Ahuja) and Avni (Vidya Balan), the son and daughter-in-law of Badri’s elder brother, return to their native village from United States and decide to stay in their ancestral palace. This leads to Siddharth’s childhood love interest Radha (Ameesha Patel), becoming jealous but she immediately recovers. Siddharth is crowned as the king, his right to the throne.
The palace where Siddharth and Avni were staying was once occupied by Raja Vibhuti Narayan, who was Siddharth’s ancestor. He had fallen in love with Manjulika, a dancer hailing from Bengal. But Manjulika was in love with Shashidhar, another dancer, who resided in a house just behind the palace and often met her secretly. On the night of Durgashtami, when the king gets to know of the affair and their plan to elope, he calls them to perform a dance one last time in the court. In the end, the king beheads Shashidhar and imprisons Manjulika in her room. Then on the day of the king’s marriage, Manjulika hangs herself and swore that her spirit would not leave any king who lived in that very palace. Various omens started taking place after that, presuming that the “evil eye” may have befallen on the king. The king too dies under unknown circumstances. Soon, with the aid of powerful sorcerers, both Vibhuti’s and Manjulika’s spirits were locked up in a room in the third floor of the palace using a sacred talisman.
Events take a twist when Avni obtains a copy of the third floor room key and opens the forbidden locked room that contains the ghost of Manjulika. Unnatural events start taking place inside the palace. Avni falls in love with the place and learns about Manjulika and her tragic story. She becomes enamored with Manjulika. Badri and Batuk Shankar (Paresh Rawal) try to ward off the evil eye with the help of a priest, Shri Yagyaprakashji Bharti (Vikram Gokhale), but unfortunately the priest has gone to London and is unsure when he might return.
Siddharth starts suspecting Radha for all the strange occurrences. He thinks she has gone crazy since he was supposed to marry her, but married Avni instead. He calls his friend, psychiatrist Dr. Aditya Shrivastav (Akshay Kumar) from New York, to try to figure out what the problem is with Radha. Once Aditya reaches the palace, things become comical, as everyone thinks he is a fool, though he is very intelligent. Aditya eventually realizes that Radha is not at fault, and that someone else behind it all, and falls in love with her. One night, he encounters Manjulika and dares her to strike. The ghost angrily vows to take her revenge on the auspicious day of Durgashtami.