Hello gaurangarya,
Since the Rule Book mentions reg the 20% penalty, etc I am not sure if you have a choice.
I am assuming that you have given your acceptance while joining this company [basically Offer Acceptance].
Usually for many, all such aspects of an Appointment Letter are not given much thought of until things reach a critical stage like it did for you.
Maybe had you perused thru the Rule Book BEFORE you resigned, you might have factored this aspect into your plans.
Coming to your statement "At the time of joining four years back, the contract had 1 month notice period", a company can change the policies anytime. But they have to inform the employees about the changes--thru any commonly used means. However, even if the company didn't, it could be tough to prove.
Frankly, I guess you don't have any option than going by the rules now. Next time, pl go thru any Offer with a fine-comb before signing on the dotted-line.
All the Best.
Rgds,
TS