Bhatt laughed off Salem's notice, saying: "There is nothing to fear as the case will fall flat since the film is not based on Abu Salem."
All it had in common with Salem's life was "the likeness of the situation where an underworld man falls in love with a woman and puts his own life in danger for her", Bhatt said.
He was referring to Salem's girlfriend, starlet Monica Bedi, who was extradited along with him November last year.
Salem, being held in a Mumbai jail, had sent Bhatt a legal notice last week, asking him to destroy all prints of "Gangster" that stars Emraan Hashmi, Shiny Ahuja and Kangna.
Some in the film industry even believe the new controversy over "Gangster" could drum up some publicity for the movie.
Salem had claimed in his legal notice that the film would affect his reputation and hamper the ongoing investigation against him in several cases. He also threatened he would take legal action against Bhatt if the film's prints were not destroyed.
"Gangster" is slated for release next week.