Dutt, who is serving his five year hail term after being convicted in the 1993 Mumbai bomb blasts case, was out on parole recently and met Hirani to discuss the script of the yet-to-be-titled film.
"He (Sanjay) has shared his story and wants it to be made and we want to keep it as honest as possible. We have worked (on) the script with Sanjay. I narrated it to him when he was here and he was happy with it. The film will see Sanjay as he is and for what he is," Hirani said at the Jagran Film Festival here.
Son of veteran actors Sunil Dutt and Nargis, Dutt made his acting debut in 1981 with "Rocky". He is best known for films like "Sadak", "Saajan", "Khalnayak", "Vaastav", "Munna Bhai MBBS", "Lage Raho Munna Bhai" among others.
Dutt's life has been full of upheavals on both professional and personal fronts.
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On the Jagran Film Festival film, Hirani said, "I am happy that Jagran Film festival is organised... More festivals the better to make sure the cinema reaches more people. It is a fantastic initiative."
The "3 Idiots" director said film festivals in India have to struggle to find their due space.
The 52-year-old director said the current phase of the Indian cinema is at its best with a good mix of big commercial and content-driver small budget films being churned out.
"Indian cinema is at its best... Prime time. Look at the cinema that is coming today. It's very different today from big commercial films to small films," he said.