[4] The film is set in Northern India, and involves a feudal patriarch, who though facing monetary problems continues a pretense of the old days.

The aristocratic Thakur (Badri Prasad), lives in the Lal Haveli (Red Mansion) with his younger daughter Mukta (Noor Jehan).

Though the house is run in the old lavish manner, there is shortage of funds, with the mansion being mortgaged to an old Rajput friend, Lacchman Singh.

At the marriage ceremony, the Pandit (priest) (Kanhaiyalal), stops the wedding saying that since Mukta's blood runs in Jawahar’s body, they are now brother and sister.

The film's review described it as "Dull And Bright -Yet Entertaining", the direction was stated to be "good in bits" but with "poor production values".

The over-all comment was "Lal Haveli continues to entertain throughout its length because the basic plot has some natural suspense in it".

[5][6][7] The success of the film, called a "runaway hit" was attributed to the comedy element largely infused in the story by Yakub playing the role of Surendra's friend.

[8] Surendra and Noor Jehan had a couple of "memorable" duets "Dil Leke Mukar Na Jaana" and "Mohania Sundar Mukhra Khol".

One of the songs in Noor Jehan's voice, "Aao Mere Pyaare Sanwariya" was composed by C. Ramchandra who was then assisting Mir Saheb in music direction.