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Bombay relates the love story of a Hindu youth Shekhar (Arvind Swamy) and a Muslim girl Sheila Banu (Manisha Koirala) from Malampur village who are caught in a senseless communal maelstrom they cannot fathom.

Shekhar and Sheila face severe opposition to their love from their orthodox parents. But amor vincit omnia and the two move away to Bombay, where Shekhar works as a proof reader in a newspaper. They get married in Bombay in a civil ceremony and lead a happy life with twin sons named Kamal Bashir and Kabir Narayan (The childrens' names are a combination of the names of their two grandfathers' and that of both Hindu and Muslim Gods).

But Shekhar and Sheila's happiness is shortlived. Communal violence rocks Bombay in the aftermath of the demolition of the Babri Masjid in Ayodhya by Hindu fundamentalists. In the orgy of violence, the young twins are separated from their parents. Searching for the young boys, a distraught Shekhar and Sheila Banu run desperately from city street to hospital to morgue.