1. Can I exercise this clause and pay for my notice period to get early relieving ?
Answer: This clause is giving discretion to the HR department or your employers to decide whether you can pay salary and terminate your services;
2. Does the employer can deny accepting notice pay (as it is not mentioned in the HR guideline that the notice pay would be accepted on employers discretion) ??
Answer: Yes the employer has full discretion in that matter;
3. what action the employer may take if I inform them a last date of working (truncating notice period) mentioning that I would pay for the balance notice period as mentioned in HR guidelines
Answer: You can try surrendering your salary and bonus as a compromise for giving you the relieving letter;
This is my response to you:
1. Make sure you surrender your salary and bonus and other amenities to quit your current job;
2. If they agree to the same then ask them for your relieving letter;
3. Ask them to consider your special case;
4. Now, if you leave the current office without completing the notice period, they could initiate action against you;
5. They may send you a legal notice;
6. If they want to harass you then they might even file suit of recovery (less likely this will happen);
7. The best option is to settle the matter at the personal level and sort it out.