Notice Period Buyout - Company Notice Period

I have been working with an IT service company for 1 yr 4 months. I resigned from my company on 19th August 2011. My company has a notice period of 2 months. The appointment letter states that:
"the comopany reserves the right to pay or withdraw salary in lieu of notice period". I want to be released by 7th oct as i have to join my new company on 10th oct, and am willing to pay for the remaining days. MY company is not willing to accept this and state that the above statement means that buying out a notice period is at the company's descretion. What can I do?

Hello nuralamrajon,
Your Company is right--as per the clause you mentioned.
basically, you have a difference of 9-10 days between what you NEED & what the Company rules dictate.
I can see you have 2 options to handle this:
1] Talk to your Manager & assure you can complete the Handing-over by 7 Oct. Usually, if the reporting Manager clears a case, HR wouldn't object, since @ the end-of-day, it's the Tech Manager's neck which is on the block.
2] Discuss with BOTH the present company AND the new company. Since as per rules [assuming you won't/can't be relieved by 7 Oct] you have to serve till 19 Oct, bargain for a reduction to 14 Oct--being Friday, may not be a problem, since that would leave ONLY 3 more working days @ the fag-end of your tenure there. In-parallel, talk to the new company to join on 17 Oct, Monday--an extension of 7 days. Usually this works better than the first option--but depends on sincerely you put-in your efforts.
All the Best.
Rgds,
TS