"Both of them talked over phone, after their counsel's met to break the deadlock. All the issues have been settled, " Mohanlal's business partner Alex K.Babu told.
The mutual settlement has come after Azhikode was detected with cancer of the spinal cord and is currently admitted to a private hospital here.
The war of words between the duo broke out last year when Azhikode came out in support of thespian actor Thilakan who was served a showcause notice by AMMA (Association of Malayalam Movie Artists) and subsequently booted out of the film actor's body on grounds of indiscipline.
The first salvo was fired by Azhikode against Mohanlal when he said that the actor has become old and should limit himself to roles matching his age and figure. The superstar was called a mentally deranged person by Azhikode.
He also added that Mohanlal should stop making money through endorsements of jewellery brands.
Mohanlal had hit back saying that Azhikode must be having some "hallucination", and he considered Azhikode's statements as some "aged uncle's joke", and that whether he should stop acting was not a matter for Azhikode to decide.
Azhikode had filed a defamation case against the actor while a legal notice was served on Mohanlal asking him to either apologise or face legal action.
Azhikode in 1986 retired as Pro-Vice Chancellor of Calicut University, his oratorical skills are unmatched and have been a crowd puller.
A bachelor, Azhikode has won twelve awards including the Indian Sahitya Akademi Award, Kerala Sahithya Academy Award, Vayalar Award and the Rajaji Award.
In January 2007 he refused to accept the Padma Shri conferred on him stating that such honours are against the Constitution.