Farhan Qureshi (R. Madhavan) and Raju Rastogi (Sharman Joshi) want to reunite with their long-lost friend, Rancchoddas "Rancho" Shyamaldas Chanchad (Aamir Khan) who really inspired them. As they are searching for Rancho together with Chatur Ramalingam (Omi Vaidya) or known as “Silencer” who is now a successful businessman, they reminisce their college days.  Back then, they are three engineering students who share a room in a hostel at India's one of the best colleges, Imperial College of Engineering. But the education system is not that good because it pressures the students to have an obsession with high grades. Farhan and Raju are average students from low-income families. Farhan aspires to be a wildlife photographer but has enrolled in engineering school to fulfill his father's wish. Raju, on the other hand, wishes to improve the fortunes of his family. While Rancho is a wealthy genius who studies simply for the joy of learning rather than the traditional obsession of the other students with exam ranks.

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Rancho always upsets the college director, Professor Viru Sahastrabudhhe (Virus) (Boman Irani), with his unconventional approach. He irritates his lecturers by providing creative and unique responses. He also confronts Virus after his fellow student Joy Lobo hangs himself in his dorm room. Joy Lobo killed himself because he was not granted by the college dean an extension for his major project.  Rancho believes that learning is more than just the traditional mode of education so he encourages his friends to think outside the box. Despite his naughty behavior, Rancho always surprises everyone by topping the class and even manages to win the heart of Virus’ daughter, Pia (Kareena Kapoor).