1. It is clearly mentioned in the appointment letter that the notice period from either side can be substituted with two month's salary which you have already offered to pay,
2. You better send another letter enclosing a cheque towards two moths salary in lieu of the balance one month's notice period,
3. The problem is that the company may harass you by not issuing or delaying release order or experience certificate on some pretext or other,
4. It will be prudent on your part to settle the matter amicably with your employer, if possible.