The film opens with Dholakpur under attack with some wild wolves taking away a baby of an innocent woman. Bheem comes to the rescue and defeats those wolves to save Dholakpur. Later in the Dholakpur royal palace, Princess Indumathi sees a horrible dream and requests her father, King Indraverma to tell her a story. Indraverma tells Indumati about a beauty of a land, Bali. In Bali, a Balian chants some mantras to release an evil and deadly demon, Rangda. Next day, King Indraverma gives a brief introduction of a boy of Bali who is none other than Arjun,the prince of Bali. Rangda is released from Kaal Dhund and creates her own army of magical demons called Leykas.
Next day, King Indraverma, Princess Indumathi along with Bheem and his friends set out on a trip to Bali. Indraverma tells more about Bali on their way. But before they reach Bali, it is attacked by Rangda and her magical demons, Leyaks. However, Arjun manages to escape and is rescued by Guru Bahula,the royal priest of Bali. Bahula manages to escape with Arjun and hide in a cave. Arjun is found unconscious lying on a bed. He soon wakes up and addresses Bheem and friends as mere kids. Chutki and Raju feel that they shouldn’t help Arjun at all. Bheem explains his friends to keep patience and asks them not to leave Arjun in this dangerous situation. Meanwhile, Rangda sends Leyaks to kill any one in Bali who has survived their previous attacks.