Dr Govindan Nair, the father of Balan and Sarasa, gets married to Meenakshi after the death of his wife. Both children are severely mistreated and exploited by Meenakshi, who is having an affair with Kittu Panicker. Dr Govindan Nair dies soon after, seeing the miserable treatment his children are receiving at the hands of the cruel stepmother. Meenakshi then marries her lover, Panicker.
When Meenakshi’s cruelties become unbearable, the children escape from the house and are later taken in by a young kind-hearted barrister, Prabhakara Menon. Meanwhile, Meenakshi realizes that according to Dr Nair’s will, she will come into a portion of his assets only if she looks after the children. She and Panicker set out to look for them, and finally Panicker forces them to leave Menon’s house. After a long, painful period Balan and Sarasa end up getting employed in an estate owned by Menon. Menon helps them file a court case against Meenakshi. When she loses, she tries to shoot Menon. Balan intervenes and is fatally injured. Menon marries Sarasa and they name their son Balan.
The first talkie in Malayalam, Balan occupies a special place in the history of Indian cinema. Made at Modern Theatres, Salem, the film was based on a story, Mrs Nair and Fate, by A. Sundaram, scripted for the screen by Muthukulam Raghavan Pillai. The film includes twenty three songs written by Muthukulam Raghavan Pillai and set to music by Ibrahim and K.K. Aroor, who are recognized as the first film lyricist and film music composers of Malayalam cinema respectively. All the songs were sung by the actors themselves.