Mili is a heartwarming story named after the protagonist played by Jaya Bachchan (then Jaya Bhaduri).
Mili is a college student loved by all in her apartment society. Her pranks endear her to everyone, particularly the children. When her brother arrives on leave from the army, she suggests that he move into the apartment on the terrace in their building.
Soon after, the people of the gated society realize that it has been occupied by somebody else. One of the neighbours tells them that it is the son of the infamous Shankar Dayal’s son. According to the rumour that engulfs the family, Shankar Dayal killed his wife and secretary after he found out about their affair, only to hang himself later. Shankar Dayal’s son is an eligible bachelor who is good-looking and rich.
The society’s children are banned from entering the terrace premises by the new owner’s helper because of the noise they make. Mili tries to talk to him but to no avail. Later at night, she is enchanted by the beautiful music played upstairs. She also sees the owner’s silhouette. The following day, she goes to the apartment and meets Shekhar, owner of the terrace apartment. He appears to be rude, easily irritable and constantly drinking.
On another occasion, one of the children tells Mili not to argue with Shekhar as he could also be a dangerous man like his father. At this, Shekhar is hurt and leaves without a word. After he leaves, Mili scolds the child. Shekhar asks Gopi, his helper to pack their things and prepare to leave.
Later, under Mili’s guidance all the children go to apologize to Shekhar. This warms his heart and he tells them that they can use the terrace. One night, Shekhar drinks heavily and creates a chaos by throwing things and shouting in despair. Gopi comes to Mili and Mr. Khanna for help, as Shekhar hurts himself in the process. Mili is tending to the wound, until her father gets some first aid from their house when Shekhar opens up to her, and she realizes how vulnerable he is. Gradually, the children grow more comfortable with Shekhar as well.
When Mili’s father and aunt leave for Poona, she visits Shekhar again. Shekhar opens himself up further and reads Mili the letter his mother left for him. Mili falls ill again. She overhears a conversation between her father and Dr. Sanjay and realizes that she does not have long to live. Shekhar sends her a bouquet of flowers every day, and soon her whole room is filled with decaying flowers.
One day, when delivering the flowers, Shekhar meets Mili’s father. When Mr. Khanna realizes the close bond the two share, he ends up telling him of her condition.
Meanwhile, Mili tells her friend Runa about her concern for Shekhar and tells her to keep an eye on him. Runa goes to Shekhar only to find out that he is planning to move out. He tells her he cannot continue to live there when Mili, who taught him how to live, is slated to die. Runa gives him a piece of her minds and Shekhar decides to marry Mili. Shekhar also consults another doctor about her illness, who says he is familiar with the case he is talking about. He discusses a doctor in Switzerland who has devoted his life to find a cure for the same illness. Mili and Shekhar leave for Switzerland as a married couple in search of a cure.