Anjaneyulu and Veera, producer and director of the film respectively, said the actress would be replaced if she did not promise them her total cooperation by July 1 and the costs would be recovered through legal means.
'The move is inevitable because we have to release the film by end of August, ' Veera added.
Earlier, Malavika had alleged that she was molested by the producer after she could not perform some dance steps as she was five months pregnant. The producer contested this.
The South Indian Artistes' Association, led by actor-turned politician Sarath Kumar, led is said to be mediating in the matter.
Malavika has starred in more than 40 south Indian films.