Dutt had essayed the character of 'Ballu Balram' in 1993 action-thriller "Khalnayak" co-starring Madhuri Dixit and Jackie Shroff. The movie, directed by Ghai, went on to become one of the biggest hits of that year.
Ghai's Mukta Arts and Sanjay Dutt Productions have entered into an agreement to produce "Khalnayak Returns" by the end of this year.
"He (Sanjay Dutt) will play 'Ballu Balram' who comes out of jail after 20 years. The script is at its final stage. Once it's complete, we will announce the rest of cast and credits," Ghai told PTI.
The "Taal" helmer has rubbished reports of Tiger Shroff being part of the project.
"We are still waiting to complete the script and will take a call for the rest of cast soon," Ghai added.