Katha is a romantic comedy drama. The movie revolves around a young man named Rajaram (Naseeruddin Shah), who works as a clerk and lives a middle-class lifestyle in a ‘chawl’ in Mumbai. Rajaram is secretly in love with his neighbour Sandhya (Deepti Naval), who is an introvert girl but wishes to marry a rich man. Rajaram finds it hard to convey his true feelings to Sandhya, but is positive that one day he will confess his love to her. However, he is shocked to learn, when his best friend, Pashu (Farooque Shaikh) comes to live with him, also falls in love with Sandhya and confesses his feelings to her. Will Sandhya choose Rajaram’s friend over him?