Relieving Process

A software company in India - has a 3 month notice period. The appointment letter clearly states the notice period as 3 calendar months or payment of 3 months basic in lieu. However in practice the company refuses to relieve an employee. The reasons are too many to go into but basic facts are this: 1. Employee has submitted resignation - to HR & Manager well in advance. Requested to get relieved in 2 months time. 2. No response has gone to the employee in spite of the employee following up many times - by email & phone. 3. Finally the date the employee requested for has come and still no response from anyone. The employee has finally also stated that he is willing to pay one month's basic salary Does the company have any standing in its position of not relieving the employee? Can they take any action against him? Is their action a violation of labour law? And finally the notice period - is it dependent on someone accepting the resignation? This company is based in Kolkatta. I am a consultant operating out of Bangalore.