Here's what happened. On IIFA night, when Varun joined the two actors on the stage at the Metlife Stadium to receive the Best Performance in a Comic Role for "Dishoom", Saif joked that the actor had made it big in the industry because of his father, director David Dhawan.
"You are here because of your pappa," Saif quipped.
Varun said: "And you're here because of your mummy (veteran actress Sharmila Tagore)."
Karan then promptly added: "I am here because of my pappa (late filmmaker Yash Johar)."
They then said in unison: "Nepotism rocks".
Varun then didn't leave a chance to take a potshot at Karan saying: "There was a song in your film... 'Bole choodiyan, bole kangana."
Karan, with his quick wit, then commented: "Kangana naa hi bole toh achha hai... Kangana bahut bolti hai. (It's better Kangana doesn't say anything, she talks a lot."