Ijaazat relives the past of the two protagonists who spend a night together, years after their time together. It begins with Mahender who arrives at a railway station on a rainy night. As the coolie places his luggage in the first class waiting room, a woman reading a magazine sees him and is startled. Though she tries to move to a separate waiting room, she is told none are available. Meanwhile, Mahender has lost the key of his suitcase, and is advised to ask the woman for help, since she has one of the same brand. While she is coming back into the room, they bump into each other and share a shocked, poignant look.
Soon, the two are left alone in the waiting room. As they share a cup of tea, they start talking to each other and discuss their lives since they last met. It is revealed that the two were married until five years ago. The woman, Sudha, has moved to Patna while he has remained in the same city. In a flashback, the narrative explores the circumstances under which the two were married by their families.
During their conversations in the train station the past resurfaces and the presence of a third person, Maya in their marriage becomes evident. Maya was Mahender’s ex-girlfriend before their marriage. Struggling to move past their close relationship, Maya kept calling the house Sudha and Mahender shared to speak to him. In an effort to mend the widening gap between them, Mahender takes Sudha on a trip and the two grow closer. On their way back, he learns Maya has been admitted to the hospital after an attempted suicide. Feeling responsible, Mahender starts visiting Maya to take care of her. Though he regularly has open conversations with Sudha about Maya, he hides his visits from her. When Sudha finds evidence of his continuing closeness to Maya, she tries to understand and keeps her hurt to herself for a while. One day, she decides to confront him, and Mahender pressures her to meet Maya with him, though she is strongly opposed to the idea.
Mahender calls Maya to inform her about the meeting, but Maya hears the conversation between Sudha and Mahender. An upset Maya decides to leave. Mahender goes to find her and returns home to find that Sudha has left him, leaving behind a letter expressing her wish to no longer remain an obstacle to the union of the two lovers.
Sudha goes back to teaching, and is eventually transferred to a school in Patna. After some time, she sends Mahender divorce papers with a letter.
As they speak, Mahender tells her about Maya’s attempt at committing suicide, which he had not divulged at the time. He talks about the heart attack he suffered when Sudha left him. When he was discharged after a month, Maya moved in with him to take care of him. Mahender received the letter and divorce papers just when he was planning to go make things right with Sudha. In anger he left and asked Maya to not leave the house in a harsh tone. Hurt and volatile, Maya rode off on their bike. Following her, Mahender finally found her fatally wounded in a road accident. Sudha is grief-stricken to learn of her death.
As the sun rises and the two prepare to leave, Sudha’s present husband comes to pick her up. The two say farewell to each other. As Sudha walks out with her husband, he realizes the man she was saying goodbye was her ex-husband Mahender. Mahender and her husband share a last acknowledging glance before parting ways.