Sunder Srivastava (Shahrukh Khan) is a young graduate whose main ambition in life is to fulfill his father's dream of starting a school on his half-acre property in his village, though he has no funds to execute his plans. Sunder's childhood friend Prem, a seasoned conman who operates in Mumbai, convinces the gullible Sunder to mortgage his land to the village Zamindar (a title meaning "landlord" in Hindi) and fly to Dubai. Prem promises Sunder a handsomely paying teacher's job in Dubai that would give Sunder enough money to start his school within two years. Sunder does as told and arrives in Bombay to meet Prem; however, there is no sign of his friend at the station. Sunder is then unwittingly involved with a petty thief who robs him of all his luggage and money. When Sunder reaches Prem's lodge, he finds an apologetic letter from Prem informing him that he has used his Rs.10,000 to get himself to Dubai instead and will one day repay him.
Now at the end of his tether, Sunder wanders into an old Christian cemetery. Sitting on an old grave, Sunder gives vent to his frustrations and strikes the tombstone in helplessness, but immediately apologises to the deceased.
This amuses the ghost of Amar Kumar ? alias Marco (Naseeruddin Shah) ? who was killed and thrown into the grave 20 years before, only to revive at Sunder's apology. Marco explains to a frightened Sunder that he was a notorious Crime Don, who at the behest of his romantic partner Savitri (Malvika Tiwari), had resolved to give up crime, but was shot by his prot?g? Kunta the day after his wedding. Marco seeks Sunder's help in getting revenge on his killers and promises Sunder a job and a place to stay in return.
Marco manages to get Sunder a post as games teacher in a school run by his (Marco's) father-in-law (Shammi Kapoor). Everyone grows fond of him thereafter, including Marco's daughter Mala (Urmila Matondkar). This last, a vivacious girl of an age with Sunder, courts the boy at least twice, accompanied by her largely invisible father. Kunta (Tinnu Anand) later makes an attempt to capture the playing ground on the college campus. The college is starved of funds and proposes a cricket match to collect funds. Sunder and his team are helped by the invisible Marco, who cheats on their behalf and ensures victory.
When Sunder tries to tell the others that he can see and talk to Marco, nobody believes him. In a final bid for victory, Kunta captures Sunder, Mala, and Marco's father-in-law, attempting to bury them alive in Marco's grave. Marco rescues them and gives all the criminals led by Kunta a beating. He is about to kill Kunta when Sunder pleads with him not to do so, whereupon Marco forgives his enemy and lets him go. Sunder subsequently marries Mala while Marco ascends to heaven. As he goes, Marco warns the youths that although he came back to life for a second chance to do the right thing, they will not have the same chance; they therefore must make the best of what chances they have.