Paavathin Sambalam is a dramatic film that explores the devastating ripple effects of sin. The story centers on military officer David (played by R. Muthuraman), whose life is thrown into turmoil by his wife Rosy's (played by Prameela) secret affair. When David discovers her betrayal, he is tormented, a suffering that the film presents as the "wages" of a sin from his past. Long before, David had lied to and rejected a woman named Stella (played by Sumithra) who was in love with him. Heartbroken, Stella became a nun, committed to a life of dignity.

Rosy's infidelity leads to the family's separation. David and his son Williams move to Bangalore, while Rosy, who has a daughter from her affair, moves to Madurai. Years later, Rosy and her daughter also settle in Bangalore, but the "bundle of sins" from their past remains. The film also brings Stella back into their lives, where she is once again drawn into their troubles. The story highlights how David, despite his position as a disciplined military officer, is helpless to control the chaos within his own family. The entire story is observed and recorded by a writer portrayed by Rajinikanth (as Kathiravan) in a guest appearance.