Reddy (Jayaprakash Reddy) is a powerful mafia leader whose right hand is Devudu (Gopichand). Devudu has a lover called Malli (Raasi). Reddy, who is also attracted to Malli, takes her to bed, much to the anger and frustration of Devudu. In a fit of fury, Devudu kills Reddy and he becomes the leader of his mafia gang.
Venkateswarlu (Ranganath) is a fire officer. In an incident, Devudu sets a market place afire and Venkateswarlu comes to the rescue, and at the same time Venkateswarlu slaps Devudu, as he continues throwing kerosene at the market place. Devudu holds grudge against Venkateswarlu and sends him to jail on a framed charge of murder.
Seetaram (Mahesh Babu) Venkateswarlu's son, tries to rescue his father from the jaws of police. But in the process, he finds out that the concerned law enforcement officers are all corrupt, and expect bribes from him to do the work. At the end of the day, a corrupt police officer kills Venkateswarlu.
The rest of the story is about how Seetaram's mother (Talluri Rameswari) takes revenge on the people responsible for the death of her husband, with the help of her son Seetaram. The criminals involved in the crime of his father's death are killed one after the other by the mother and the son in a planned and scientific manner.
Nijam was also in the Top 5 movies in consideration for ‘India’s official entry to Oscars’ in the foreign film category.
The movie was a success at the box office and received critical acclaim as well winning Nandi Awards in the Best Actor and Best Supporting Actress categories.
The movie received pan India recognition after being dubbed 'Meri Adalat' in Hindi , and in Tamil as 'Nijam'. Due to its mass appeal it was also remade as 'Arjuna' in Oriya.
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