Updated on 22nd May:
This is what Mani Ratnam has to say about Lajjo here,”Yes, it’s still at the scripting table. Once it falls into place, it will come onto the cards.”

Here is the earlier news:

Courtesy (copy-pasted from): The A.R.Rahman Fan Club

The curious case of Lajjo
The screenplay was ready but Ratnam was not willing to get it scanned by the usually nitpicking Aamir Khan. Khan wouldn’t go further unless he was shown the screenplay.
He’s a director who won’t brook any interference and he’s an actor who is legendary for his interfering ways in practically every department, be it the script, direction, the works. The Mani Ratnam-Aamir Khan combo sounded lethal when it was announced over a year ago. And now it is learnt that the twain may never meet.

The film’s would-be producer Bobby Bedi is not saying a word — even if the word is that the news is off the track. Second time lucky? Aamir Khan was paired with Kareena Kapoor. She has gone on record to say that she would be shooting with her Yuva director once again, come this August. This is the second time that a KhanKapoor project has gone for a full toss. Earlier, the two were supposed to share screen space for Vishal Bharadwaj’s Mr. Singh and Mrs. Mehta; the project was shelved. Next, the Chennai-anchored director announced that he would be making a film with Aamir and Kareena as soon as he had completed and released Guru. Nearly four months have passed since the release of Guru.
According to an insider on the project, “Bobby Bedi was aware that bringing two hot-headed personalities together would be difficult.. he had spoken to them separately about the possibility of creative differences.. and requested each one of them to be mutually respectful of each other’s responsibilities.” Obstacles begin So far, so good. Problems started with Mani Ratnam paying more attention to Guru. And Lajjo which was supposed to go on the floors last October, had to be postponed to this year.
Since the film is set in Rajasthan, Bedi and Ratnam wanted to shoot the entire film around winter in a non-stop schedule.The shoot was expected to begin in mid-October this year. It is learnt that the screenplay was ready but Ratnam was not willing to get it scanned by the usually nitpicking Aamir Khan. And obviously, Khan wouldn’t go further unless he was shown the screenplay.
Another problem: Mani Ratnam needed a dialogue writer because he is not well-versed in Hindi. “Mani sir wanted someoneabsolutely fluent in Urdu since Lajjo is a period love story. He zeroed in on Gulzar saab. But Gulzar saab made it clear that he would not brook any kind of interference. Even if Mani sir had convinced Gulzar saab, Bedi was worried that he would end up handling three diverse temperaments,” says a source.
The budget was another problem. Mani Ratnam didn’t want to leave any stone unturned to make the project lavish. But after burning his hands with Mangal Pandey, Bedi was a bit apprehensive.
The project is the brainchild of Bedi, who is close to both Ratnamand Khan. Reportedly Bedi bought, the rights few to the story some five years ago. Previous plan He approached Ratnam to adapt the Chugtai story. Before this they had toyed with the idea of making a film on Mrs Indira Gandhi, but had dropped the idea.
Next, Bedi discussed the idea with Aamir Khan during the making of Mangal Pandey. It is learnt that he even agreed to pay a hefty fee.. approximately Rs 10 crore to Aamir Khan ( he charged Rs 7 crore for Yashraj Films’ Fanaa).
“With two talented people known for following their own conviction, the ego tussle was obvious, but Bedi used to be a bridge among the two,” a source discloses.
For visual splendour, Ratnam had booked his favourite cinematographer P C Sreeram. The two have worked together on Mouna Ragam (1986), Nayakan (1987), Gitanjali (1989), Thiruda Thiruda (1993) and Alai Payuthey (2000).
This was to be Kareena Kapoor’s second period film after Ashoka. Kapoor has signed a formal contract for the film. In fact, she had been asked to block her dates last year ..which she did by not taking up any other project. This had led to the speculation that she was not being offered any worthwhile movies. This year, again her dates have been blocked. But it is doubtful that she is taking any chances of giving that no-employment impression yet again — she has already signed on a couple of projects and is in negotiation with several other filmmakers. This has added further credibility led to the speculation that Lajjo has packed up. Initially, producer Bobby Bedi was willing to talk on Lajjo, but halfway through our conversation, he suddenly remembered that he had an “important meeting” and said, “Can you please call me in half an hour?” When he was contacted again, he said, “I can’t hear you, call me tomorrow.” After that he has been unreachable.