Set in the monsoon Mumbai season, the film revolves around intertwined lives of Aamir Khan (Arun in the lead role), and Monica Dogra (NRI girl Shai) and Prateik Babbar (washerboy Munna).
Praising director Kiran Rao and her husband Aamir Khan in the lead role for doing a "terrific, terrific job,'' Bailey told: "'Dhobi Ghat' is really not a masala move. It has no song, no dancing. It's really an independent film - a story that's a love letter to Mumbai, it's very much about the people of Mumbai.
And it has Aamir Khan in a role of an artist that you often don't see him in - he has done a terrific job. The film's three intertwined stories really give you the feel, the texture of Mumbai today.''
Asked why he picked up the film for the festival, he said, "I love the film - it's that simple. I have talking to them for months. When I saw it in July in Mumbai, I fell in love with it. It is very beautifully done. It's very provocative, romantic.
It really captures the feel of Mumbai - the things I love about the city, the vibrancy of the place, the feel of its streets, and the people. And it all happens in the monsoon season so that you get the texture of the rain, and how it feels to be there at that time of the year.''
Bailey added, "It is a film of great ambition - it is doing things that we don't see in Indian cinema very often. Then you have Aamir Khan - who I think is really one of the national treasures of India - in the lead role. All these things combined made it a movie we had to have here.''
With 'Dhobi Ghat,' the Toronto film festival boss said, Kiran Rao has made a dream directorial debut.
"This is her first directorial effort, though she has been working on films for years. I think she is part of a generation of filmmakers that we are seeing come up now in India - a new school in international cinema.
This generation is not making films out of the Indian commercial cinema context, but making films that are referencing American independent cinema or European cinema or Asian cinema.
"Kiran has talked to me about being influenced by a couple of Asian film makers - Tsai-Ming Liang from Taiwan and Wong Kar-wai from Hong Kong. So I find that there is now a kind of dialogue happening among filmmakers in different parts of the world.''
He said, ""Dhobi Ghat' is a film that will work on the international stage, and I think she (Kiran) is a super talented filmmaker.''
Apart from 'Dhobi Ghat,' Anurag Kashyap's 'The Girl in Yellow Boots' is another main Indian entry at this year's film festival.