Surjeet had allegedly called Kher a "RSS (Rashtriya Swayamsevak Sangh) agent". Kher was sacked from the chairmanship of the Central Board of Film Certification last year, reportedly on Surjeet's insistence.
Kher said he was considering pulling out of the legal proceedings after a local court adjourned the case to May 16 as Surjeet again failed to appear before the judge.
"For the last three-four months, he has been running away out of fear of facing either this court or me. I am a busy man, and just adjourning the matter will not take us anywhere," he told reporters here.
"Keeping in mind his age and illnesses, I want to free him from this fear. I want to tell him that I have forgiven him," said Kher.
Kher was appointed chief of the Indian censor board by the previous government.
Earlier, Kher had asked the CPI-M general secretary to "satisfactorily substantiate the allegation or publicly deny the same within 48 hours".
Kher had insisted that Surjeet's comments caused him "undeserved humiliation and disrepute".
The government appointed veteran actress Sharmila Tagore as the censor board chief in place of Kher.